On Wednesday, the European Commission will present plans to ensure that Europe can compete with the United States as a manufacturing hub for electric vehicles and other green products while reducing its reliance on China.
Ursula von der Leyen, President of the European Commission, is expected to announce a relaxation of EU state aid rules, repurposing of existing EU funds, faster approval of green projects, and initiatives to boost skills and seal trade agreements to secure critical raw material supplies.
The plan partly responds to China’s and the United States multibillion-dollar support initiatives, including the latter’s Inflation Reduction Act.
Many EU leaders are worried that the $369 billion in green subsidies’ local content requirements will encourage businesses to relocate, making the United States the leader in green tech at the expense of Europe.
According to the International Energy Agency, the market for clean energy that can be produced in large quantities will triple to about $650 billion annually by 2030, creating more than twice as many jobs in manufacturing. The European Union is keen to participate.
While acknowledging that not all EU countries can offer subsidies to the same extent as France or Germany, the Commission plans to relax the rules on state aid for investments in renewable energy or decarbonizing industry.
For instance, the 800 billion euro post-COVID Recovery Fund still has about 225 billion euros ($244.15 billion) in loans that EU members could use.
In the long run, the Commission will suggest setting up a European Sovereignty Fund to invest in cutting-edge technologies.
In the coming months, the Commission will implement a Critical Raw Materials Act to encourage local extraction, processing, and recycling and a Net-Zero Industry Act that could simplify permitting procedures and harmonize standards.
Lithium and rare earth, essential components of the green transition, depend heavily on China for supply in the bloc.
The EU executive also wants to sign more free trade agreements and partnerships to strengthen supply chains and expand markets for eco-friendly products.
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