'Make Europe the home of clean tech': VDL calls for more subsidies to fund EU's future

Ursula von der Leyen on Tuesday presented a latest Green Deal Industrial Plan as a method to fight the US Inflation Reduction Act.

The European Commission President made her pitch on the World Economic Forum in Davos.

The proposal comes as negotiations with the US seem stalled despite European efforts to get an exemption just like the one granted to Canada and Mexico. Talks between the 2 sides were scheduled to proceed this evening with a gathering between Executive Vice-President Dombrovskis and US Trade Representative Katherine Tai. 

Von der Leyen’s aim is to “avoid disruptions in transatlantic trade and investment”, she said. Because of this she demanded specific solutions for the US, “in order that EU corporations and EU-made electric cars may also profit from the IRA”. 

The US plan is valued at $369 billion and is to be dolled out over the subsequent decade. 

“At the center of the joint vision is our conviction that competition and trade is the important thing to speeding up clean tech and climate neutrality. And that signifies that we Europeans also have to recuperate at nurturing our own clean-tech industry,” von der Leyen said.

A four-pillar plan

Von der Leyen’s plans aim to make sure the EU can compete with the US at an industrial level and are based on 4 pillars. 

“We have now a plan, a Green Deal Industrial Plan. Our plan to make Europe the house of fresh tech and industrial innovation on the road to net zero,” the Commission chief told people gathered within the Swiss resort.

The pandemic, the long supply chain issues, and the inflation have had a tough effect on European industry. To avoid greater damage, the EU Commission will propose a Net-Zero Industry Act. 

Its goal will likely be to simplify permitting for brand new clean-tech production sites.

The US plan has raised fears of European corporations moving to the opposite side of the Atlantic and even relocating all of the method to China attributable to what von der Leyen considers “aggressive attempts to draw our industrial capacities away”.

To compete with it, the brand new proposal will make the interest in clean tech “faster to process, easier to fund and simpler to access for small businesses and for all Member States.”

Because the EU is fighting to go away behind its dependency on Russian gas, von der Leyen believes that the EU has a “compelling have to make this net-zero transition without creating latest dependencies” or to deepen the prevailing ones. 

Because of this the Commission desires to create a “critical raw materials club” and break the dependency on China.

“For rare earths, that are vital for manufacturing key technologies – like wind power generation, hydrogen storage or batteries –, Europe is today 98% depending on one country – China.”

The proposal also comes with a brief change in state aid rules. “Easier calculations, simpler procedures, accelerated approvals. For instance, with easy tax-break models. And with targeted aid for production facilities in strategic clean-tech value chains, to counter relocation risks from foreign subsidies,” she said. 

But von der Leyen is aware of the risks of debilitating the Single Market as some EU countries have larger fiscal space. To avoid a “fragmenting effect” the European executive is preparing a “European Sovereignty Fund as a part of the mid-term review of our budget later this 12 months”.

The EU proposal will even deal with the skills required by employees in keeping with 2023 being the European Yr of Skills and promote trade agreements worldwide.

“We’re working to conclude (trade) agreements with Mexico, Chile, Latest Zealand and Australia; and to make progress with India and Indonesia,” the Commission president added. 

A risk for the Single Market?

Von der Leyen’s proposal to create a latest common fund potentially financed through common debt comes because the European Commission confirmed what was already an open secret: Germany and France are chargeable for 77% of the state aid approved by the EU’s executive because the starting of the Russian war on Ukraine.

With less money, and thus less capability to assist their very own industries, the opposite EU countries hope that the European Commission is working to resolve the situation.

An obvious solution can be the creation of a latest recovery fund. Six countries — Denmark, Finland, Ireland, the Netherlands, Poland and Sweden — are urging the Commission to exercise great caution with the relief of state aid rules over fears it may lead to a so-called “subsidy race” and the fragmentation of internal market.

“Just state aid can not help all of the countries, but just some of them, like for instance Germany or France which have more room, more possibilities. So what we predict it’s vital now (and it’s vital now, not too late), is a latest Recovery Fund,” Five Stars Movement MEP Tiziana Beghin told Euronews.


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