Strategy to Boost EU’s Green Transition Competitiveness, Counter Foreign Cleantech Subsidies

The European Commission today announced the launch of its Green Deal Industrial Plan, a series of strategies and initiatives aimed at enhancing the competitiveness of the Europe’s net zero industries, and supporting the EU’s transition to climate neutrality.

The plan focuses on key areas including creating a simpler regulatory framework to facilitate net zero industries, upskilling the European workforce for the green transition, accelerating access to investment and financing, and enhancing global trade cooperation for cleantech and raw materials.

The plan was first introduced by EU Commission President Ursula von der Leyen at the World Economic Forum annual meeting in Davos last month, and comes as global competition heats  up between regions and countries looking to establish themselves as centers for innovation and production for the rapidly emerging cleantech and net zero-focused economy.

In her speech introducing the plan today, von der Leyen highlighted how many countries are “stepping up their investment in the net-zero industry,” noting in particular the U.S.’ Inflation Reduction Act, which allocates nearly $370 billion to areas including renewable energy and industrial decarbonization solutions, as well as green investment plans recently announced by Japan, the UK, Canada and India.

von der Leyen said:

“Let me be very clear on this one: We welcome this, this is good news. We have long since argued that the fight against climate change is a must. A must for our planet; a must for our economic prosperity; and a must for our strategic independence. We are competitive, we need competition. What we are looking at is that we have a level playing field in the global competition as well as a level playing field within the Single Market.”

Plans to create a more predictable and simplified regulatory environment will include a proposed Net-Zero Industry Act aimed at providing faster permitting to facilitate the quick deployment of the EU’s net-zero industrial capacity and net zero technologies, as well as a Critical Raw Materials Act, ensuring access to materials needed for manufacturing clean energy-focused technologies. The plan also envisions a reform of the electricity market enabling consumers to benefit from the lower costs of renewables.

On the finance and investment front, the plan includes simplifying and accelerating aid granting at the state level to promote investment in key sectors, as well as channeling existing EU funds, including €250 billion from REPowerEU, the EU plan to end its reliance on Russian fossil fuels, and from the InvestEU programme, which mobilizes investment towards sustainable investment, innovation and job creation in Europe, and the EU Innovation Fund, an EU funding program for the demonstration of innovative low-carbon technologies.

The Commission said that it will also propose a European Sovereignty Fund aimed at boosting resources for upstream research, innovation and strategic industrial projects.

In order to upskill and reskill the workforce for the green transition, the plan includes proposals to establish Net-Zero Industry Academies targeting strategic industries, and will also focus on improving labor participation for youth, women and older workers, aligning public funding for skills development, and facilitating third country nationals to EU labor markets in priority sectors.

One of the plan’s priorities is to “protect the Single Market from unfair trade in the clean tech sector,” such as subsidies provided under other countries’ green investment strategies. The Commission said that it aims to foster global cooperation and enable trade to help facilitate the green transition, with plans to develop a network of free trade agreements. The Commission also said that it will explore the creation of a Critical Raw Materials Club, ensuring the supply of critical raw materials bringing together raw materials users and resource-rich countries.

von der Leyen said:

“We have a once in a generation opportunity to show the way with speed, ambition and a sense of purpose to secure the EU’s industrial lead in the fast-growing net-zero technology sector. Europe is determined to lead the clean tech revolution.”