A new Industrial Plan aligned with the EU’s 2050 climate targets, designed to rival the US’s Inflation Reduction Act, has been announced by European Commission president Ursula von der Leyen.
The plan, which is in development, was announced by von der Leyen during her speech at the World Economic Forum’s (WEF) annual meeting in Davos on Tuesday (17 January).
The ‘Green Deal Industrial Plan’ seeks to cover changes to regulation, financing the transition, ensuring appropriate skills, and promoting the trade of cleantech and low-carbon industrial products within and beyond EU member states.
“The net zero transformation is already causing huge industrial, economic, and geopolitical shifts – by far the quickest and the most pronounced in our lifetime,” von der Leyen said. “It is changing the nature of work and the shape of our industry. But we are on the brink of something far greater.”
“The next decades will see the greatest industrial transformation of our times – maybe of any times. And those who develop and manufacture the technology that will be the foundation of tomorrow’s economy will have the greatest competitive edge. The scale of the opportunity is clear for all to see.” she continued.
A key topic of von der Leyen’s talk addressed the US Inflation Reduction Act (IRA). The IRA was initially proposed with a budget of $555 billion (£450bn), but was eventually scaled back to $369 billion (£300bn). It was signed into law in August 2022 and looks to reduce inflation across the country through significant investment into climate action.
Among the sectors set to receive a funding boost are existing wind and solar technologies, next-gen renewable energy technologies like floating wind and green hydrogen, electric vehicles, alternative aviation and shipping fuels, and low-carbon technologies for ports. Funding is also available for upskilling and reskilling workers and improving infrastructure resilience in places frequently affected by extreme weather.
EU countries expressed “serious concerns” about the design of the financial incentives included in the package, fearing the act could lead to US-made imports undercutting EU-made technologies, putting their companies at an unfair disadvantage.
“It is no secret that certain elements of the design of the Inflation Reduction Act raised a number of concerns in terms of some of the targeted incentives for companies,” von der Leyen said in a keynote speech.
Europe’s new industrial plan will focus first on speeding up regulatory approval for clean tech industrial projects.
According to von der Leyen, the new Green Deal Industrial Plan will include the EU’s own answer to the IRA – a new ‘Net Zero Industry Act.’ Running through to 2030, the act will focus first on speeding up regulatory approval for clean tech industrial projects, provide “clear goals” for certain kinds of technologies, and allow for new state aid to deliver these goals.
“To keep European industry attractive, there is a need to be competitive with the offers and incentives that are currently available outside the EU,” von der Leyen said.
The EU executive will prepare a European Sovereignty Fund as part of the mid-term review of the bloc’s long-term budget, she added.
No details were given about the size of the planned fund, and it does not yet have the support of all EU governments, notably Germany.
But von der Leyen said both the Sovereignty Fund, and an intermediate pool of cash that could be mobilised faster – a “bridging solution” – would offer both grants and loans in targeted support. She said the Commission was now working on what the needs of the green industry were.
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