The passage of the Inflation Reduction Act in the United States last year (2022), which heavily subsidizes green industries, has caused volatility in European markets. Concerned about the outflow of green technology, the European Commission announced the "Green Deal Industrial Plan" yesterday (1st). This plan aims to ensure the competitiveness of Europe's net-zero industries through simplified regulations, rapid funding, talent training, and international supply chain collaboration.
Within this framework, the Commission is expected to propose a "Net-Zero Industry Act" to accelerate the deployment of a net-zero industry. While the "Green Deal Industry Plan" could help Europe counter green subsidies from China and the United States, it has also drawn negative responses. The European Council is scheduled to meet on February 9-10 to discuss the plan, which is expected to be a lively debate.
Four major policies ensure leading net zero technology
The "Green Deal Industry Plan," presented by the European Commission on the 1st, consists of four major initiatives. Commission President Ursula von der Leyen stated that Europe is determined to lead the clean technology revolution and maintain its leading position in the rapidly developing net-zero industry.
To streamline regulations, the Commission will propose a "Net Zero Industry Act" to streamline application and review processes and establish industry standards to facilitate the scalability of technology. This legislation will be complemented by a "Critical Raw Materials Act" to help European manufacturing industries secure critical raw materials. The EU currently relies heavily on China for rare earths and lithium, both of which are key raw materials for the green transition.
The EU did not specify the size of the subsidies it would provide, but emphasized that funds would be available "faster." The EU will strengthen public financing and cooperation with the European Capital Markets Union to encourage private capital to invest heavily in the green transition and make it easier for member states to provide subsidies. The Commission is also expected to propose the establishment of a European Sovereignty Fund to invest in emerging technologies.
In terms of supply chain and international cooperation, in addition to promoting international cooperation such as free trade agreements (FTAs), the EU also plans to establish a "Critical Raw Materials Club" to connect raw material suppliers and consumers to ensure the supply of raw materials.
Global green subsidy race: Europe fears green technology and investment moving abroad
In December 2019, the European Commission proposed the "European Green Deal," setting a goal of becoming the first climate-neutral continent by 2050. However, foreign media interpreted the EU's proposed "Green Deal Industry Plan" as primarily a response to the fierce global race for green subsidies, particularly between the United States and China.
Last year, the US passed the "Inflation Reduction Act," which allocates $369 billion to investments in carbon reduction and green technologies, and provides various tax credits for renewable energy. Reuters noted that many European leaders worry that European green technology companies will shift their development to the US, allowing the US to take the lead.
The Guardian reported that the European Commission has accused China of using "unfair" and "market-distorting" subsidies to gain a lead in the clean energy technology race. While Europe's "anger" toward the United States is relatively clear, the EU's plan is also partly a response to China's subsidy policies.
However, the Commission's plan has not received unanimous support. Reuters expects heated debate at the European Council meeting. While German Economy Minister Robert Habeck has expressed support, many EU member states oppose some aspects of the plan, particularly the relaxation of state subsidies, fearing that major powers like France and Germany will overtake other countries.
Source: Environmental Information Center (https://e-info.org.tw/node/236010)
