The European Commission this week presents its plans to increase its industrial competitiveness, improve access to critical raw materials and reform its electricity market so that the European Union competes with the United States and China in the technological race of the new zero-emission economy.
Brussels’ plans will be unveiled after European Commission President Ursula von der Leyen and U.S. President Joe Biden announced on Friday that they will begin negotiating a trade pact to favor European companies that make electric vehicles and establish a “transparent dialogue” on the subsidies both sides are giving for green energy.
Von der Leyen considered the meeting “constructive” and noted that they managed to find solutions to the tensions that have marked the transatlantic relationship in recent months after the approval in the US of the so-called Inflation Reduction Act (IRA).
That Washington law, with its 340,000 million euros in green subsidies to local production, was the trigger for the industrial plan with which Brussels wants to prevent companies from leaving the EU attracted by the massive aid and cheaper energy that other powers can offer to a growing sector.
With China planning to invest 260,000 million euros in the next five years and Japan another 140,000 million, the first estimates suggest that the EU should mobilize at least 350,000 million for the sector.
The most immediate response has been the relaxation of state aid rules adopted on Thursday, which will allow European governments to match the aid that Washington offers to clean technologies in order to prevent the flight of companies to US soil.
It will be possible until the end of 2025 as part of the strategy to not lose the race in the manufacture of essential products for the green transition such as batteries, solar panels, wind turbines, heat pumps or electrolyzers.
The EU thus enters a subsidy race in a market whose value will triple to 600,000 million euros in 2030, according to calculations by Brussels, which on Tuesday will present a Zero Emissions Industry Law to set production targets by the end of the decade.
“We plan to increase our capacity, exports and jobs in clean technologies,” said Industry Commissioner Thierry Breton, recalling that the EU risks ending up importing products such as electric vehicles, where it now takes the lead.
Brussels wants to speed up the granting of permits, setting strict deadlines for administrations and creating one-stop shops to reduce bureaucracy, especially for projects considered strategic, and plans to create academies to train professionals in the sector.
The measure will be complemented by a Critical Raw Materials Law to reduce dependence on third parties to obtain essential elements in technological production.
Currently, the EU imports 98% of the rare earths it consumes from China, 98% of borate from Turkey, 78% of Chile’s lithium, and more than 70% from platinum and other metals from South Africa, among others.
To alleviate the situation, Brussels plans to set targets for extraction, refining and recycling of critical materials in the EU, halve the waiting time for extraction permits, and coordinate existing reserves to prevent future crises.
The Commission will also seek to diversify sources of supply, creating new partnerships with reliable countries. In this context, the visit of the President of the Commission, Margrethe Vestager, this week to Chile, Colombia and Brazil, as well as the meetings held in Canada by the head of the Community Executive.
Energy is more expensive in the EU than in the US, a country with large reserves of petroleum and gas, which is an added drag on industrial competitiveness.
That is why the Commission will present on Thursday a proposal to reform the electricity market that, according to drafts consulted by EFE, aims to encourage long-term fixed contracts between producers and consumers.
It seeks to avoid episodes of price volatility such as those of 2022 and guarantee profitability to companies that invest in renewables so that these sources continue to displace gas and electricity becomes cheaper.
The role of nuclear energy in that scheme will be one of the controversial points, with France as a champion of atomic electricity and Germany and Spain against.
The pace and depth of reform will also generate debate. The goal is for it to be approved within a year, but Berlin has suggested making some small adjustments now and undertaking the major restructuring after the European Parliament elections in 2024.