The European Commission has warned that European industry faces existential challenges, linked above all to high energy prices and global competition. In a world marked by surging geopolitical tensions, the EU executive arm wants to act to prevent other powers from overtaking the European Union’s economy.
To revive Europe’s industry without giving up on its climate goals, the Commission is to deploy a plan called the “Clean Industrial Deal” (CID) to encourage investments in decarbonisation and clean technologies in the European Union.
“The Clean Industry Deal is Europe’s business plan to tackle the climate crisis, boost competitiveness, ensure economic resilience and retain talent,” European Commission Vice- President Teresa Ribera Rodríguez said at the launch of the policy in Brussels.
The Commission said that the pact is a roadmap to simultaneously accelerate the reindustrialisation and decarbonisation of the EU, with a focus on supporting two key sectors: energy-intensive industries such as chemical manufacturers and the clean technology sectors like wind turbine producers.
Most of the policies included in the CID need to be passed by the EU member states and the European Parliament.
Until then, here’s the European Newsroom’s breakdown for you.
“Pulling out all the stops” to make energy cheaper
Ribera said the Commission is “pulling out all the stops” to reduce energy prices for industry in the EU under the CID.
One of the immediate steps is for EU member states to lower the taxes paid by energy intensive industries on electricity and eliminate levies that finance non-energy policies, the Commission said.
To ensure price stability for businesses, the Commission will also relax state aid rules to allow EU countries to subsidise industrial firms. The Commission also wants to tackle bottlenecks and delays in the permitting process and help industry switch to cleaner energy sources.
In the long term, the Commission will work with EU countries to dramatically increase investments in energy grids, renewable energy and energy storage capacity. .
In another move for the future, Brussels is shifting the bloc’s focus towards more long-term electricity contracts to counteract price fluctuations.
It will launch, together with the European Investment Bank (EIB), a line of guarantees to reduce the risk in long-term energy purchase contracts, giving companies greater price certainty.
Finally, the Commission will implement faster approvals for sustainably-priced electricity, encourage more cross-border energy trade to reduce prices and introduce more interconnectors for the bloc’s energy grid.
The Commission’s energy measures aim to save industry and households 45 billion Euro in 2025, gradually increasing to 130 billion per year by 2030 and 260 billion per year by 2040.
Financing the transition: state aid, tax incentives and 100 billion Euro from the Commission
The EU needs to increase its annual investments in energy, industrial innovation and transport systems by around 480 billion Euro compared with the previous decade to achieve the transition to a zero-emission economy, according to the Commission.
The EU executive arm believes that public aid and tax incentives will play a crucial role in reaching this volume of investment while also attracting private financing.
The Commission will urge EU countries to adopt tax incentives for clean energy and technologies projects and companies, such as allowing shorter depreciation periods for clean technologies so that companies are compensated earlier for high initial investments.
The ClD also contains a new state aid framework to be established in 2025 for the clean energy and technology sector to support the manufacture of green technologies, such as batteries, or to speed up the approval of subsidies for projects to reduce emissions.
The Commission also wants to mobilise over 100 billion Euro from public and private sources for sustainable and clean energy technologies in an Industrial Decarbonisation Bank, using the bloc’s innovation investment fund as well as the revenues from the EU’s Emissions Trading System (ETS).
There will also be additional guarantees of 1 billion Euro for clean technologies as part of the bloc’s current multi-annual EU budget.
“Made in Europe” to be the preference for Clean Tech
The Commission wants to support the European clean technology sector with a ‘Made in Europe’ label. The Brussels authority is aiming for 40 percent of climate-friendly technologies to be produced in the EU in the future.
It also proposes favouring European companies over competitors from China or the US in public procurement in strategic sectors.
More critical raw materials for use in the clean technology sector should also be sourced and mined in the EU, according to plans in the CID.
Often facing local opposition over their environmental impact, the Commission has pledged to facilitate more mining exploitation or research projects. This is a bid to reduce reliance on suppliers from riskier sources like China.
This article is part of the enr’s EU Elections Spotlight “EU Commission von der Leyen II: 100 days and counting”. The content is based on news by agencies participating in the enr.