How we can keep Europe competitive as a business location with a climate-neutral industry

Blog post, 8.02.2023

In response to the US Inflation Reduction Act (IRA), the EU Commission presented the „Green-Deal-Industrial Plan for a Net-Zero Age“ on February 1, 2023. In the run-up to the special summit of the European Council on February 9 and 10, at which this package of measures will be discussed, the Climate Economy Foundation, together with over 40 other business organizations, think tanks and NGOs, has signed an open letter to the heads of state and government of the 27 EU member states. What matters now. An excerpt.

International competition – The US Inflation Reduction Act as a symptom

More climate protection, future-proof jobs, faster transformation – these are just some of the goals of the US Inflation Reduction Act (IRA) passed in August 2022. While the law – in terms of climate policy – met with widespread approval from the EU and its member states, aspects such as „Buy American“ requirements and extensive and unbureaucratic „tax credits“ are causing growing concern about an increased migration of European companies to the USA in view of high energy prices in the EU. However, threats from the Chinese side to restrict the export of key energy transition technologies such as solar panels also show: Europe urgently needs to find an industrial policy response to the challenges in the international race for climate neutrality.

EU Commission presents comprehensive industrial plan

The European Union, for its part, has now presented its Green Deal Industrial Plan for the Net-Zero Age (GDIP), a strategy to pick up the pace in the global race for clean technologies and achieving climate neutrality, and to strengthen its pioneering position. According to Commission President von der Leyen, e must invest in climate-friendly technologies. In addition, access to subsidies for climate-neutral industry must be expanded and simplified. To this end, the Commission plans to relax the rules for state aid, approve climate protection projects more quickly, combat the shortage of skilled workers and push trade agreements to secure scarce raw materials.

EU Green Deal Industrial Plan: What matters now

In the run-up to the European Council’s deliberations on February 9-10, 2023, on the EU Industrial Plan presented by the EU Commission, the ClimateEconomy Foundation together co-signed an open letter to the heads of state and government of the 27 EU member states. In it, more than 40 progressive European business organizations, companies, innovators, think tanks and non-governmental organizations position themselves behind the industrial plan and call for clarity and speed in its design,

Simpler processes, faster allocation of funds, more pragmatism

„We urgently need more clarity on how the EU intends to position itself vis-à-vis global competitors in terms of industrial policy,“ emphasizes Sabine Nallinger, Executive Director of the Climate Economy Foundation. „Our companies are demanding simpler processes, faster allocation of funds and more pragmatism.“ The GDIP is a key lever for a rapid and robust EU strategy to promote competitiveness, productivity and climate protection.

More funding for cleantech, net-zero technologies, and manufacturing industry

As a co-signatory, the ClimateEconomy Foundation calls for strengthening the manufacturing industry and building the infrastructure for a climate-neutral economy, in addition to strategically promoting cleantech and net-zero technologies. „In the GDIP, old concepts must not just be wrapped in new garb. Rather, acceleration concepts that have already been discussed must finally be put into practice,“ says Sabine Nallinger.

Clarification and disclosure of financing options

With regard to the financing options outlined in the GDIP, many unanswered questions remain. In addition to the realignment of existing EU pots, new concepts for the financing of strategically important industries in the EU are needed in the long term, emphasizes Sabine Nallinger.

The importance of international cooperation

Highlighting the importance of international cooperation, Sabine Nallinger stresses: „Europe must not allow itself to be divided, either internally or in relation to our international partners and allies. Especially now, it is important to stick together and formulate a common response in Europe.“ She continues, „The momentum of acceleration unleashed by the U.S. can and will help us drive the transformation of our industry globally and keep the 1.5°C target within reach.“