The EU executive is considering a target that would see 40% of the bloc’s clean tech made in Europe by the end the decade, as part of a response to a wave of subsidies from the US and China.
According to a draft of the EU’s Net-Zero Industry Act, which is due to be unveiled next week, 40% of green tech needed to meet the bloc’s climate and energy targets should be made in the EU by 2030.
The 40% target, which could change before the draft is finalised, is part of Europe’s answer to the US Inflation Reduction Act (IRA), which offers $369bn (£311bn) of subsidies to green-tech manufacturers, as well as China’s long-running policy of lavish state support for the sector.
Some EU leaders have sharply criticised the IRA, arguing that it discriminates against European companies selling to the US and provides inducements for them to shut up shop in Europe and move production to America.
The European Commission president, Ursula von der Leyen, is expected to raise the issue when she meets Joe Biden at the White House in Washington on Friday.
Since the coronavirus pandemic exposed Europe’s shortfalls in medical equipment, there has also been momentum behind a push led by the French president, Emmanuel Macron, for a “sovereign” Europe with a stronger manufacturing base, less dependent on foreign imports.
The EU is currently a net importer of net-zero energy technologies, according to the draft regulation seen by the Guardian. It notes that a third of electric cars and batteries and nearly all solar photovoltaic modules and fuel cells come from outside the EU, mostly from China. Even in areas where EU industry remains strong, such as wind turbines and heat pumps, “our trade balance is deteriorating and EU producers face headwinds of rising energy and input costs”, it continues.
EU leaders will discuss the plans at a Brussels summit later this month (23-24 March), as part of a broader push to speed up the green transition but also to boost the mining and extraction of critical raw materials in Europe, such as rare earths, aluminium and copper – ores and metals used to make electric batteries and wind turbines.
To achieve the 40% target by the end of the decade, the EU executive wants to speed up planning permission for plants manufacturing net-zero technologies. Currently, it can take between two and seven years to build a new factory, depending on the technology and member state.
The draft proposes that large plants producing net-zero technologies that are deemed “strategic” should be able to get a permit within one year. Smaller strategic plants should be granted permission within nine months.
Net-zero factories will be considered strategic if they help the EU reduce a heavy dependency on imports, lead to a significant expansion in capacity or create many high-skilled jobs.
While the commission insists that any permitting process would be in line with EU laws on water protection and nature conservation, the plans may raise concern among environmentalists if the EU’s climate goals are seen to be in conflict with biodiversity.
The draft states that “net-zero strategic projects” should be given priority status and urgent treatment in all judicial and dispute resolution processes.
EU governments will also be granted more flexibility in how they support European industry under the bloc’s strict rules on subsidies.
Speaking in Davos in January, Von der Leyen said it was no secret that the US Inflation Reduction Act had “raised a number of concerns”, although her stronger criticisms of “unfair competition” have been levelled at China.
“We Europeans also need to get better at nurturing our own clean-tech industry,” she told the Davos audience. “We have a small window to invest in clean tech and innovation to gain leadership before the fossil fuel economy becomes obsolete.”
