EU leaders have agreed that targeted, temporary and proportionate measures should be taken to secure Europe’s future as a manufacturing base for green tech products, and to counter U.S. and Chinese competition. This decision comes in response to the U.S. Inflation Reduction Act (IRA), which will offer $369 billion in subsidies with local content requirements.
German Chancellor Olaf Scholz expressed his confidence at a news conference at the end of the leaders’ summit in Brussels, stating that discussions with the transatlantic partners could limit discrimination against European companies.
“When we are looking at our competitiveness, we need to do our own homework and do everything to ensure that we do not have an international subsidy race,” he added.
The International Energy Agency estimates that the global market for clean energy technologies will reach $650 billion a year by 2030. The European Commission plans to introduce a Net-Zero Industry Act to speed up permits for green projects, and a Critical Raw Materials Act to boost recycling and diversify sourcing away from China.
However, the most controversial element of the plan is the funding. There is resistance to joint borrowing, and some countries are concerned that looser state aid rules could harm the single market. Countries such as the Netherlands, Ireland, the Czech Republic and the Nordics argue that improving the EU single market would be more effective.
EU leaders are aiming to ensure that Europe can compete in the green tech industry, as the global market for such products is expected to triple in the next decade. They now hope to achieve this with targeted, temporary, and proportionate support, while avoiding an international subsidy race and ensuring the integrity of the EU single market. The proposed Net-Zero Industry and Critical Raw Materials Acts will be presented by March 22-23.
