The European Commission unveiled its strategy on Wednesday to meet the challenges posed by the U.S. Inflation Reduction Act (IRA) and keep up with global competition for green industry subsidies.
When presenting the Green Deal Industrial Plan, European Commission President Ursula von der Leyen stated that net-zero industries are crucial to the fight against climate change.
Four pillars support the plan: a favorable regulatory environment for net-zero industries, funding for green industries and technologies from both the United States and the EU, the provision of the necessary skills for the green transition, and an ambitious trade agenda for the construction of “resilient” supply chains.
It aims to loosen restrictions on state aid and make it possible for a significant amount of private financing to be made available for the production of clean technology in the EU.
In order to accomplish this, the EU’s member states will need to be consulted by the European Commission before the current framework for state aid can be changed. One possible change would be to raise the notification thresholds for green investment support.
Margrethe Vestager, commissioner for competition and executive vice president of the Commission, advised that the proposed amendment should be short-lived, well-targeted in size and scope, and contingent on actual benefits.
Therefore, it carries a risk. According to Vestager, “some countries will be able to deliver far more money than others.”
She stated that the new provisions ought to match only those industries, such as wind turbines and batteries for electric vehicles, that are affected by the IRA.
According to Vestager, EU nations generally agree that a portion of Joe Biden’s $369 billion IRA poses a threat to the competitiveness of particular key sectors for the green transition of European industry.
The EU has chosen to carefully nurture rather than damage its relationship with the United States in light of the dual challenges posed by rising energy costs as a result of the Russian-Ukrainian conflict and the IRA’s potential to relocate European green industries. Von der Leyen argued in her speech on Wednesday that the EU countries “welcome” the United States bill and that “the fight against climate change is a must.”
In the meantime, however, she insisted that the EU’s single market and global competition should be leveled. “This is so important to us,” she continued.
Von der Leyen stated that the proposals from the Commission would be discussed at the EU summit the following week.