The European Union unveiled a raft of new measures aimed at nurturing green tech and securing raw materials as it seeks to keep its place in the race with the US and China amid growing global protectionism.
(Bloomberg) — The European Union unveiled a raft of new measures aimed at nurturing green tech and securing raw materials as it seeks to keep its place in the race with the US and China amid growing global protectionism.
The European Commission presented goals to ramp up the processing of key metals in Europe, measures to make green-energy investments easier, and incentives for renewables and carbon-capture. Its Net Zero Industry Act aims to keep clean tech manufacturing within Europe with a 40% target for key sectors like solar panels and batteries by the end of the decade.
The initial reception was mixed. While some industries welcomed the efforts, others said they didn’t go far enough to offset the lure of stronger — and simpler — measures set out by U.S. President Joe Biden late last year. The Brussels-based think tank Bruegel described the bloc’s planned response as “unabashedly protectionist.”
Read More: Here’s a detailed breakdown of the EU’s answer to US green legislation
The 27-member bloc is seeking to reclaim a share of the industries where it once had the ascendancy, but lost out to China — like solar. It’s also trying to make sure it doesn’t lose out again in nascent sectors like heat pumps, electrolyzers and carbon capture and storage, which are seen as key for meeting its goal of climate neutrality by the middle of the decade.
The plans still need to be approved by the parliament and member states, and could be amended before they’re implemented.
US Easier
Some industry groups and observers said they were pleased to see the EU take action, but are worried about some of the specifics.
“Europe remains behind,” said Maximo Miccinilli, head of energy and climate at the consulting firm FleishmanHillard EU. “The problem remains that the US approach and way of contributing is much easier to apply and much easier to get the money.”
Germany’s biggest association of carmakers and auto-parts suppliers said the policies fall short of what’s needed. While the VDA praised efforts to identify strategically critical raw materials, the group said the lack of EU-level tax credits or subsidies will create “misplaced” competition between member countries looking to attract investment.
Biden’s Inflation Reduction Act initially drew a sharp rebuke from EU officials, though they have since changed their tone, emphasizing the strength of the bloc’s single market and also the scale of its own financial incentives for business. There are also efforts under way for the US and EU to find common cause in some areas.
Read: US, EU Seek Deal on Minerals Amid Race for Green Investments
Currently the EU only produces around 10% of the solar panels it installs, while China is the dominant global supplier for two-thirds of the critical raw materials identified by the EU in 2020.
Another area where the EU still lags far behind is the price it pays for its energy. Russia’s invasion of Ukraine saw electricity and gas skyrocket. They’ve both since receded thanks to emergency measures and a mild winter, but remain many times higher than in both the US and China. A reform of the common EU electricity market this week offered measures aimed at calming volatility, but fell short of a radical overhaul.
–With assistance from Alberto Nardelli, Jillian Deutsch and Joshua Gallu.
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