With the new year underway, funding and financial incentives provided through the U.S. Inflation Reduction Act are now expected to ignite renewable energy projects and efforts to reduce greenhouse gas (GHG) emissions in the U.S. Similar developments will soon take shape in the EU, with the launch of its Green Deal Industrial Plan on February 1.
With similar investments also made in China, Japan, the U.K., Canada and India, the EU plan intends to secure the bloc’s ability to compete globally in green tech.
What’s Included in the EU Green Deal Industrial Plan?
The Green Deal Industrial Plan is recognized as necessary for the EU transition to a green economy. It’s built on four pillars: the regulatory environment, access to funding, skills and open trade.
A Regulatory Environment That Is Predictable and Simplified
Contributors to the Green Deal Industrial Plan acknowledge that, while necessary, European regulation should not get in the way of competitiveness. So, to ensure that “competitiveness impacts” are identified and addressed and that unnecessary regulatory burdens are avoided, a “competitiveness check” will be applied against all new regulation.
Simplification is achieved through regulation that applies across the EU, which then prevents fragmentation among EU member states.
The European Commission’s regulatory approach will include the Net-Zero Industry Act, which will provide a framework for the production capacity of products that will help the EU meet its climate neutrality goals. Products may include windmills, batteries, heat pumps and carbon capture and storage technologies, among others.
In particular, the Net-Zero Industry Act will determine goals for industrial capacity by 2030, taking the entire supply and cross-border value chain into consideration to prevent bottlenecks. It will reduce the length of the permitting process and promote greater predictability in the process. The act will also establish operational criteria for identifying net-zero supply chain projects of strategic value.
The European Commission will also propose a Critical Raw Materials Act to ensure access to the raw materials needed for net-zero technology manufacturing. The act is intended to secure raw material supplies through stronger international engagement, extraction, and processing and recycling.
Expedited Access to Adequate Funding
Both public and private funding are seen as critical for the advancement of renewable energy and green technologies. Funding at the EU and state levels will be key. Member states will be given flexibility to grant aid on a temporary basis and within defined areas, and EU funding will be increased to help level the playing field within the region. REPowerEU, which intends to expedite the EU’s move away from fossil fuels, has been tagged as the best vehicle for funding the EU’s net-zero industry, and other EU funds will be used to supplement this resource.
The EU will need to up-skill and re-skill its workforce to carry out its green transition. The European Commission notes that the battery industry alone will require an additional 800,000 workers by 2025. A range of initiatives including the European Skills Agenda, the European Education Area and the European Pact for Skills will be tapped to develop these “green and digital” skills.
The European Pact for Skills represents an ambitious plan that supports partnerships within Europe’s industrial sector. The pact’s 14 large-scale partnerships promote engagement among companies, workers, public authorities, and education and training providers, among others, who have collectively committed to up-skilling and re-skilling 6 million people.
Additionally, the European Year of Skills 2023 will champion projects such as a large-scale skills partnership for onshore renewable energy, a heat pump skills partnership, a European strategy for universities, as well as an improved ability to monitor supply and demand in skills and jobs needed for the green transition.
The European Commission holds that net-zero technology incentives must be aligned with the principles of fair competition and open trade. The EU’s free trade agreements, its support of the World Trade Organization, as well as the EU-U.S. Task Force on the Inflation Reduction Act and the Sustainable Investment Facilitation Agreements already exist to support its pursuit of open trade.
The Commission has also outlined several new initiatives to support its open trade pillar, including a Critical Raw Materials Club, Clean Tech / Net-Zero Industrial Partnerships and an export credits strategy.
Preparing for Green Competition
The Green Deal Industrial Plan is part of the European Green Deal, which acts as the foundation for the EU’s goal of reaching net zero by 2050. While the Green Deal’s various components aim to move the EU toward a more sustainable future, the Green Deal Industrial Plan aims to establish the EU as a leader in green technology and renewable energy. The EU has taken note of incentives and subsidies on offer in several Asian and North American countries and with its green industrial plan, the European Commission has signaled its intent to compete.
Read about other regulatory developments within the EU here.