EU Green Deal : EU presents Green Deal Industrial Plan to boost green industry

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In response to the US Inflation Reduction Act, which provides for billions of dollars in subsidies, the European Commission has now presented its Green Deal Industrial Plan.

The plan aims to enhance the competitiveness of Europe's net-zero industry and support the fast transition to climate neutrality.

In a statement the European Commission said that the Green Deal Industrial Plan will ensure that the EU has access to the technologies, products and solutions that are key to the transition to net-zero and that represent a major new source of economic growth and quality jobs. It will strengthen the competitiveness, and attract investments in the net-zero industrial base and in green industrial innovation.

The Plan builds on previous initiatives and relies on the strengths of the EU Single Market, complementing ongoing efforts under the European Green Deal and REPowerEU.

The Green Deal Industrial Plan is based on four pillars:

  • A predictable, coherent and simplified regulatory environment, which supports the quick deployment of net-zero manufacturing capacities;
  • Faster access to sufficient funding, by boosting investments while avoiding the fragmentation of the Single Market;
  • Skills, by ensuring that the European workforce is skilled in the technologies required by the green transition; and
  • Open trade for resilient supply chains, based on cooperation with the EU's partners to ensure diversified and reliable supplies and fair international competition.

Ursula von der Leyen, President of the European Commission, 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. For our companies and people, it means turning skills into quality jobs and innovation into mass production, thanks to a simpler and faster framework. Better access to finance will allow our key clean tech industries to scale up quickly.”

A predictable and simplified regulatory environment

The first pillar of the plan is about a simpler regulatory framework.

The Commission will propose a Net-Zero Industry Act to identify goals for net-zero industrial capacity and provide a regulatory framework suited for its quick deployment, ensuring simplified and fast-track permitting, promoting European strategic projects, and developing standards to support the scale-up of technologies across the Single Market.

The framework will be complemented by the Critical Raw Materials Act, to ensure sufficient access to those materials, like rare earths, that are vital for manufacturing key technologies, and the reform of the electricity market design, to make consumers benefit from the lower costs of renewables.

Faster access to funding

The second pillar of the plan will speed up investment and financing for clean tech production in Europe. Public financing, in conjunction with further progress on the European Capital Markets Union, can unlock the huge amounts of private financing required for the green transition. Under competition policy, the Commission aims to guarantee a level playing field within the Single Market while making it easier for the Member States to grant necessary aid to fast-track the green transition.

To that end, in order to speed up and simplify aid granting, the Commission will consult Member States on an amended Temporary State aid Crisis and Transition Framework and it will revise the General Block Exemption Regulation in light of the Green Deal, increasing notification thresholds for support for green investments. Among others, this will contribute to further streamline and simplify the approval of IPCEI-related projects.

The Commission will also facilitate the use of existing EU funds for financing clean tech innovation, manufacturing and deployment.

Enhancing skills

As between 35% and 40% of all jobs could be affected by the green transition, developing the skills needed for well-paid quality jobs will be a priority for the European Year of Skills, and the third pillar of the plan will focus on it.

To develop the skills for a people centred green transition the Commission will propose to establish Net-Zero Industry Academies to roll out up-skilling and re-skilling programmes in strategic industries. It will also consider how to combine a ‘Skills-first' approach,
recognising actual skills, with existing approaches based on qualifications, and how to facilitate access of third country nationals to EU labour markets in priority sectors, as well as measures to foster and align public and private funding for skills development.

Open trade for resilient supply chains

The fourth pillar will be about global cooperation and making trade work for the green transition, under the principles of fair competition and open trade, building on the engagements with the EU's partners and the work of the World Trade Organization. To that end, the Commission will continue to develop the EU's network of Free Trade Agreements and other forms of cooperation with partners to support the green transition. It will also explore the creation of a Critical Raw Materials Club, to bring together raw material 'consumers' and resource-rich countries to ensure global security of supply through a competitive and diversified industrial base, and of Clean Tech/Net-Zero Industrial Partnerships.

The Commission will also protect the Single Market from unfair trade in the clean tech sector and will use its instruments to ensure that foreign subsidies do not distort competition in the Single Market, also in the clean-tech sector.

While the Plan generally is seen as a foundation for a much-needed boost to the green industry in Europe, it raises concerns among environmental groups due to the unclear definition of "net-zero" technology, the deregulatory temptation and the unfair nature of subsidies, the European Environmental Bureau (EEB) said in a statement.

Criticism from environmental organisations

“Green subsidies are good but not enough to have a meaningful effect on climate. Without cutting fossil fuel subsidies, pricing carbon properly and introducing measures to reduce demand, these financial efforts will be toothless. The EU will not deliver this transition in time by throwing money at clean technologies. It also needs to make dirty production more expensive and phase out harmful tech” said Luke Haywood, Head of Climate Policy at the EEB. Experts from the EEB further criticize the lack of regulatory framework and the “deceptive net-zero” label. “The draft includes a lot of nice talk around ‘net-zero’, ‘clean’, ‘innovative’ or ‘breakthrough’ technology without clarifying what is actually meant,” said Christian Schaible, Head of Zero Pollution Industry at the EEB. “Claiming the EU industry has a track record as a proven trendsetter is a myth, we need sound environmental regulation and conditionalities to build a truly sustainable European industry.”

Even though the EEB “celebrates the EU’s aim to bridge the gap of skilled people needed for the green transition”, there should be a focus on green and socially compatible technologies like solar panels, heat pumps, and building renovation and not on flawed tech solutions like Carbon and Capture Storage or biofuels,” said Katy Wiese, Policy Officer for Economic Transition and Gender Equality at EEB.