IRA and the net-zero race: How the EU industrial policy should respond

Press statement, released March 23, 2023

With the Inflation Reduction Act (IRA), the United States has joined the international race to net-zero. A welcome development that poses nonetheless a policy challenge for the European Union’s own path to climate neutrality. Stiftung KlimaWirtschaft – German CEO Alliance for Climate and Economy has commissioned the consultancy firm Deloitte to develop a study to analyse the EU Commission’s Green Deal Industrial Plan and the Net-Zero Industry Act and provide considerations what an EU industrial policy response to the net-zero challenge should encompass.

Businesses have made clear that the ramp-up of renewable energy and hydrogen production is essential for the European single market to remain competitive. In the wake of structurally high energy prices, induced by fossil fuel imports, a much faster and more ambitious deployment of renewable energy is the best way forward to lower energy prices.

A European industrial policy should focus on pragmatism and speeding up planning and approval processes, as well as bringing energy costs down. It remains crucial that the EU does not enter into a subsidy race with other economic blocs but finds its own path for a smart and effective industrial policy. Funding instruments such as the Important Projects of Common European Interests (IPCEIs) or the innovation fund should be improved in the wake of the Green Deal Industrial Plan to simplify and increase efficiency in approval and disbursement. Adding OPEX funding to existing CAPEX-focused instruments is also vital for the success of the Net-Zero Industry Act.



This study was commissioned by Stiftung KlimaWirtschaft. The views expressed in the study do not necessarily represent the views of Stiftung KlimaWirtschaft or its supporting companies.