The European Union's goal by 2030 is to ensure that 40% of the key technologies required for the fight against climate change are produced within the EU. This target is the central element of the new strategy. The strategy has been developed to boost local industry and reduce dependency on foreign suppliers, primarily China – a country that holds a significant lead in the production of batteries, solar panels and wind turbines.
The industrial strategy is a response to the Inflation Reduction Act (IRA) passed by US President Joe Biden last year. The IRA includes a package of 369 billion US dollars in tax credits and direct subsidies to promote investment in green technologies, but only if those products are manufactured in North America.
The generous injection of American money caused panic among policymakers in Brussels, resulting in a new industrial strategy being developed in record time. It is based on competitiveness, and the European Commission has unveiled its further plans under the title of the Net-Zero Industry Act.
Competitiveness is the guiding principle behind the latest plans, which the European Commission has unveiled under the title of the Net-Zero Industry Act. The Act identifies eight sectors that are “strategically important” to the EU in both the short and long term: solar, wind, batteries, heat pumps and geothermal energy, electrolysers for hydrogen production, sustainable biogas and biomethane, carbon capture and storage, and electricity grids.
These “strategic projects” should be granted faster administrative and permitting processes – 9 to 12 months, compared to 12 to 18 months without the special status. Where necessary, these projects could take precedence over public interests relating to environmental protection, a point which environmental NGOs, including the World Wide Fund for Nature, have already criticised.
The selected sectors will also benefit from relaxed subsidy rules, which were published at the beginning of March.
The Commission believes that such a favourable regime should attract investors and accelerate the deployment of green technologies needed to phase out fossil fuels and achieve climate neutrality by the middle of the century.
However, the approach proposed by Brussels, under which member states will effectively pick certain sectors to the detriment of others, has triggered accusations of protectionism and dirigisme (“dirigisme” (from the French diriger – “to direct”) is an economic doctrine in which the state plays a strong directive (policy) role, as opposed to merely a regulatory role of intervention in a market economy) – two ideologies that contradict the free-market principles that the EU has long championed.
European Commission Executive Vice-President Frans Timmermans (Frans Timmermans), who is responsible for the “Green Deal”, dismissed such accusations and also denied comparisons with China, where the Communist Party shapes the economy and sets growth targets through five-year plans. “The only mistake I think we made, and in industrial policy that would be an outdated mistake, is that we do not have an industrial policy. And we had that in Europe for too long, thinking that the market would take care of everything itself,” F. Timmermans told reporters. “So what we are doing is forward-looking, not old-fashioned. That is what you have to do when an industrial revolution is taking place.”
Although nuclear energy is not included in the list of “strategic projects” in the strategy, it states that national governments could support “advanced technologies for power production from nuclear processes with minimal waste from the fuel cycle” and “small modular reactors”.
The role of nuclear energy in the EU's “green” transition has sparked massive debate and divided member states into seemingly irreconcilable pro-nuclear and anti-nuclear factions.
European Commissioner for the Internal Market Thierry Breton (Thierry Breton), who is French, said that it was time to “get past ideologies” and “revitalise” Europe's nuclear industry.
“The data is there. Without nuclear power, there is neither strategic autonomy nor a contribution to climate change,” said T. Breton. “It is also, let's face it, a technology where there is a real risk of losing expertise.”
The drafts of the plans are complex, and for the European Commission, which has spent decades struggling to develop a long-term industrial policy – an area where its competence is limited and which has traditionally been the remit of member states – this is a major step forward.
The Net-Zero Industry Act will be discussed for the first time when EU leaders meet in Brussels for a two-day summit. Thereafter, the EU Council and the European Parliament will debate the texts, which will enshrine the production targets in legislation, before they can enter into force.
Domien Vangenechten (Domien Vangenechten), a senior policy advisor at the E3G think tank, believes that the Commission's proposal has a stronger industrial character than a “green” one. “It looks more like competition policy or economic policy,” D. Vangenechten told Euronews. “Obviously there is a green element to it. We are talking about manufacturing capacity for those technologies that are very important for the transition to net zero. What is missing is a sort of next step.”