As previously reported, the European Commission President, Ursula von der Leyen, highlighted the EU’s cleantech strategy during a Special Address at the World Economic Forum in Davos.
Proposing a solution to the current challenges and competitors in the global clean technology industry, the Commission President presented a new “Green Deal Industrial Plan” predicated on four pillars: the regulatory environment, financing, skills and trade.
Pillar 1: “speed and access”
The first pillar sets out plans to create a regulatory environment that can ensure “speed and access” – enabling the bloc to “scale up fast and to create conducive conditions for sectors crucial to reaching net zero” such as wind, heat pumps, solar, clean hydrogen, energy storage. Indeed, demand for these sectors was “boosted” with the EU’s NextGenerationEU and REPowerEU initiatives last year.
According to Ms von der Leyen, the European Commission is planning to introduce a new “Net-Zero Industry Act”, which would aim to identify clear targets for European clean tech by 2030. “The aim will be to focus investment on strategic projects along the entire supply chain. We will especially look at how to simplify and fast-track permitting for new clean-tech production sites,” she said. In parallel to this Net-Zero Industry Act, we will reflect on how to make Important Projects of Common European Interest on clean tech faster to process, easier to fund and simpler to access for small businesses and for all Member States.”
President von der Leyen also highlighted the Act’s role in limiting the bloc’s dependency on critical raw materials. “The Net-Zero Industry Act will go hand in hand with the Critical Raw Materials Act. For rare earths, which are vital for manufacturing key technologies – like wind power generation, hydrogen storage or batteries – Europe is today 98 per cent dependent on one country – China,” she underlined. “Or take lithium. With just three countries accounting for more than 90 per cent of the lithium production, the entire supply chain has become incredibly tight.”
To respond to this issue, the Commission President said that the EU needs to improve the refining, processing and recycling of raw materials, domestically. She added that in parallel with these efforts, the bloc will work with trade partners to “cooperate on sourcing, production and processing to overcome the existing monopoly”. As part of this, Ms von der Leyen set out plans to “build a critical raw materials club working with like-minded partners – from the US to Ukraine – to collectively strengthen supply chains and to diversify away from single suppliers”.
Pillar 2: increasing competitiveness with state aid reforms
The second pillar seeks to secure investment and financing of clean-tech production. As part of this strategic objective, the EU needs “to be competitive with the offers and incentives that are currently available outside the EU”, said Ms von der Leyen. “This is why we will propose to temporarily adapt our state aid rules to speed up and simplify. Easier calculations, simpler procedures and accelerated approvals. For example, with simple tax-break models. And with targeted aid for production facilities in strategic clean-tech value chains, to counter relocation risks from foreign subsidies.”
However, the temporary state aid reforms are expected to be combined with greater EU funding to avoid “a fragmenting effect” on the single market. “For the medium term, we will prepare a European Sovereignty Fund as part of the mid-term review of our budget later this year. This will provide a structural solution to boost the resources available for upstream research, innovation and strategic industrial projects key to reaching net zero,” said the Commission President. “But as this will take some time, we will look at a bridging solution to provide fast and targeted support where it is most needed. And to support this, we are currently working hard on a needs assessment.”
Pillar 3: plugging the skilled labour shortages
The third pillar focuses on developing the needed skill force, attempting to plug the already pronounced skilled labour shortages in Europe’s green sectors such as EVs (electric vehicles). “The best technology is only as good as the skilled workers who can install and operate it. And with a huge growth in new technologies, we will need a huge growth in skills and skilled workers in this sector,” said Ms Von Der Leyen. She added that this will be “a priority” in the European Commission’s European Year of Skills initiative, which seeks to strengthen training and up-skilling for the European workforce this year.
According to data presented by the European Commission, more than three-quarters of companies in the EU report difficulties in hiring workers with the necessary skills.
Pillar 4: ensuring “strong and resilient” supply chains
Last, but not least is the EU’s fourth pillar which highlights the need for “strong and resilient supply chains” in order for “clean tech to deliver net zero globally”. “Our economies will rely ever more on international trade as the transition speeds up to open up more markets and to access the inputs needed for industry. We need an ambitious trade agenda, including by making the most of trade agreements for example with Canada or with the UK – with which we are trying hard to sort our difficulties,” said President von der Leyen.
Highlighting steps that the EU aims to take in this area, the Commission President said that the bloc is “working to conclude agreements with Mexico, Chile, New Zealand and Australia; and to make progress with India and Indonesia”. She also said that the EU needs to “restart a conversation” regarding the bloc’s free-trade agreement with Mercosur (Argentina, Brazil Paraguay and Uruguay) which has stalled since 2019 due to trade protection and environmental issues raised by EU Member States.