Posted on February 1 Updated on February 1, 2023 6:00 PM 2023 at 9:53 PM
It’s a measured response that Ursula von der Leyen unveiled on Wednesday in response to the United States and China’s massive subsidies to their green industries, which are likely to deindustrialize the EU by attracting European companies to their country.
The President of the Commission outlined the main lines of the Green Deal industry plan she is proposing to the Twenty-Seven as a global struggle for leadership in these industries looms.
“equal treatment”
“We want to guarantee equal treatment internationally,” explained Ursula von der Leyen, while the USA has budgeted 500 billion dollars in subsidies and tax breaks for its “clean” technologies over a decade. “This decade will show if we are victorious on climate change,” she continued. So far, the EU has led the use of neutral technologies.
The European plan is to launch a new industrial policy, relax state aid rules again and redistribute existing European funds.
Already announced in Davos, the law for “a net-zero emissions industry”, pushed by Thierry Breton, aims to make it possible to develop “a cutting-edge technological industry in the EU” by defining industrial capacity targets by 2030. The internal market estimates the Financing needs at 350 billion and estimates that “a hundred billion” are missing today.
Modeled on a recently passed law to encourage local semiconductor production, it aims to encourage cross-border projects and simplify the issuance of permits to revitalize industrial activity. “The use of renewable energies currently takes between six and nine years,” complained Ursula von der Leyen. If we don’t move faster, we’ve lost our fight against climate change. »
Nothing has been finally clarified yet, because on February 9, the heads of state and government of the EU member states are to discuss the Commission’s plan at a summit meeting in Brussels.
increase in state aid
The statements are fueled in particular by the other main axis of the Green Pact, the easing of state aid. The Commission is making sweeping changes while shielding its system so as not to penalize the less prosperous states. Overall, access to subsidies will be further simplified until 2025 and extended to all renewable energy sources.
Above all, and this is a “significant change in state aid policy”, according to Competition Commissioner Margrethe Vestager, the member states will only be able to invest in green technologies to support production capacities, including through tax advantages, risk outsourcing, such as batteries for electric vehicles or wind turbines.
It’s about better competing with the amounts being put on the table by the United States and China. The aid is limited in time and capped. “To remain fair to all Member States, we propose higher percentages and caps for the less developed regions of Europe,” said the Vice-President of the Commission.
Another provision will allow Member States to prevent the diversion of investment outside of Europe through appropriate subsidies from other countries. “If a company is offered $1 billion by a third country to support a new battery factory, for example, she illustrated, a member state could offer the same until the funding gap is closed. »
controversies
Regarding the very sensitive issue of funding, instead of launching new instruments that are already the subject of controversy between member states, Brussels wants to mobilize existing funds from the RepowerEU, InvestEU or even the Innovation Fund programmes. A total of 390 billion euros are available.
Other means will be needed in the longer term. For this reason, Brussels has launched the idea of a sovereignty fund to finance innovative sectors, which is also far from unanimous among member states and should see the light of day by the summer. . “The Sovereignty Fund must protect cohesion and the internal market from the risks posed by unequal availability of state aid,” said Valdis Dombrowskis, EU Trade Commissioner.
Countries like Germany, the Netherlands, Finland and Denmark are against the new financing instruments. France is committed to setting up an instrument similar to Sure, a temporary support to protect jobs during the Covid-19 epidemic. And Italy is undoubtedly the state most in favor of a new EU budgetary instrument. In short, “there is little chance that the February summit will result in an agreement on funding,” European sources say, as people’s minds are still immature despite the urgency of the situation.