Deep Dive on EU Green Deal Industrial Plan

The Green Deal Industrial Plan

The European Union recently announced the launch of the European Green Deal Industrial Plan to enhance the development of Europe’s net zero economy and support climate-neutral transition.

The European Green Industry Plan was initially proposed at the World Economic Forum in January this year and is part of the European Green Deal proposed in December 2019. The European Green Plan proposes to reduce carbon emissions by at least 55% by 2030 and build Europe into the world’s first carbon-neutral region by 2050.

The European Green Industry Plan includes four parts, namely, a predictable and simplified regulatory environment, faster access to sufficient funding, skills, and open trade for resilient supply chains.

A Predictable and Simplified Regulatory Environment

The EU believes that a simple, predictable, and clear regulatory environment is the key to promoting investment. EU plans to:

1. Put forward the Net-Zero Industry Act on the basis of Green Deal Industrial Plan, support the industrial manufacturing of key technologies, and ensure the production of products related to climate neutrality goals;
2. Propose the Critical Raw Material Act to reduce the EU’s dependence on the supply of other economies through diversified procurement and raw material recycling;
3. Implement the REPowerEU plan to improve the use of renewable energy and reduce the negative impact of high energy prices on enterprises and supply chain;

Faster Access to Sufficient Funding

The EU believes that the global investment in clean energy grows by 10% in 2022, and the subsidy policies from abroad are affecting the EU’s industrial market share. Therefore, it is necessary to expand the financing channels of the net zero industry and promote the prosperity of the industrial chain. EU plans to:

1. Temporarily adjust the national aid rules, further speed up the calculation, simplify the approval process, and avoid greater regional differences in the investment;
2. Continue to implement the REPowerEU and InvestEU plans, promote member countries to invest in net zero technology, and provide 40 billion euros to the Innovation Fund in the next decade;
3. Establish a comprehensive Capital Markets Union, expand the scale of the market and cross-border fund flows, and improve the financing opportunities of companies;

Skills

The EU believes that net zero needs more talents with green skills. According to statistics, the number of labor in the green transformation industry has doubled from 2015 to 2021, and in the future, 35% to 40% of jobs will be related to transition. EU plans to:

1. Set up tools to measure the job supply and labor demand of green transition industries;
2. Implement the European Strategy for Universities and provide funds;
3. Establish new channels to attract talents from STEM industry to work in Europe;
4. Establish Net-Zero Industry Academies and provide skill training programs;

Open Trade for Resilient Supply Chains

The EU believes that incentives based on the principles of fair competition and open trade can promote the realization of the net zero target. However, some economies’ subsidy policies for export products have affected trade fairness. EU plans to:

1. Establish the Critical Raw Materials Club to link raw material consumers with resource-rich countries, so as to provide safe, sustainable and affordable global raw material supply;
2. Develop Clean Tech Industrial Partnerships to promote the global adoption of net zero technology and play a role for the EU in the global clean transition;
3. Formulate export credit strategy, strengthen the coordination of financial instruments, and make other economies consistent with EU policies;
4. Issue the Regulation on Foreign Subsidies, investigate the subsidy policies of third countries, and ensure that they will not weaken the competitiveness of EU industries;

EU’s Evaluation of Green Deal Industrial Plan

The EU believes that the green industry plan will enhance the attractiveness of the European net zero economy. In the context of high short-term energy prices, the EU needs to take targeted additional measures to support European industrial development. EU will launch a broader industrial strategy in March this year to improve its long-term competitiveness.

Reference:

The Green Deal Industrial Plan (europa.eu)