EU Presents $270 Billion Green Deal Industrial Plan To Keep Up The Energy Transition

EU Presents $270 Billion Green Deal Industrial Plan To Keep Up The Energy Transition - Carbon Herald
Image: Alexandros Michailidis/Shutterstock

The European Commission’s efforts to support the green transition are complemented by the newly presented Green Deal Industrial Plan. The new plan was launched on Feb 1st, 2023 with the goal of enhancing the competitiveness of Europe’s net-zero industry and providing a more supportive environment for scaling up green technologies. 

The proposed plan will set aside €250 billion ($272 billion) from already active EU funds that are aimed at decarbonizing industry.

Von der Leyen, as well as a number of other EU leader, have recently made it clear that the bloc needs to respond to the Inflation Reduction Act, which was announced in mid-2022 and is (generally) designed to favor US companies or to attract global players with tax incentives. It’s the leading climate legislation in the US and is set to deploy $369 billion for decarbonizing industry and transportation.

This new version of the plan was first announced by President von der Leyen in her speech at the World Economic Forum in Davos in January 2023 and portrayed as the initiative for the EU to sharpen its competitive edge through clean-tech investment and leadership on the path to net zero.

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The plan complements the European Green Deal and REPowerEU – the plan to rapidly reduce dependence on Russian fossil fuels and fast forward the green transition. The European Green Deal was presented in 2019 and constitutes a set of policy initiatives by the European Commission that are fit for reducing net greenhouse gas emissions of the union by at least 55% by 2030, compared to 1990 levels.

The Green Deal Industrial Plan is based on four pillars: a predictable and simplified regulatory environment, faster access to funding, enhancing skills, and open trade for resilient supply chains.

The first pillar, the simplified regulatory framework includes a proposition of a Net-Zero Industry Act, complemented by the Critical Raw Materials Act. 

The goal of the net-zero act is quick deployment of green projects, ensuring simplified and fast-track permitting, and promotion of European strategic projects. The Critical Raw Materials Act will ensure sufficient access to materials, like rare earth, that are vital for manufacturing key technologies.

Faster access to funding includes member states having the opportunity for easier access to grants necessary for the green transition.

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Developing the skills needed for the net-zero economy is also a critical part of the transition, therefore the Commission will propose to establish Net-Zero Industry Academies or up-skilling and re-skilling programs in strategic industries. It will also consider how to facilitate access of third-country nationals to EU labour markets in priority sectors.

The final pillar is about global cooperation and open trade for a resilient supply chain. The Commission plans to continue the development of the EU’s network of Free Trade Agreements, explore the creation of a Critical Raw Materials Club and other forms of cooperation with partners to support the green transition. 

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The Critical Raw Materials Club involves bringing together raw material ‘consumers’ and resource-rich countries to ensure global security of supply through a competitive and diversified industrial base.

The Commission also announced it will protect the Single Market from unfair trade in the clean-tech sector and will use its instruments to ensure that foreign subsidies do not distort competition in the Single Market.

The Green Deal Industrial Plan complements other green initiatives of the EU that should accelerate the transition. It provides more guidance on policies and some work done to simplify procedures, especially in regards to access to funding. That should help the industry feel more confident about the future direction of the Commission and thus unlock private capital for clean technologies.

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