EU Sets Forth 'Green Industry Plan'

    EU Sets Forth 'Green Industry Plan'
    Last updated Feb 01, 2023
    Image credit: Reuters [via US News]


    • On Wednesday, the European Commission announced plans to loosen state aid rules and propose a new European sovereignty fund to counter the US's $369B Inflation Reduction Act and China's "unfair" subsidies to domestic green technologies.[1]
    • According to the proposal, the Green Deal Industrial Plan would preserve a European edge on critical and emerging technologies.[2]
    • In addition, EU Pres. Ursula von der Leyen proposed faster approval of green projects and sealing trade agreements to secure supplies of critical raw materials to reduce EU dependence on China.[3]
    • The EU is reportedly racing to compete with the US to avoid businesses relocating to North America — where energy costs are cheaper — making the United States a leader in green tech at Europe's expense.[4]
    • EU leaders are due to meet next week in Brussels to discuss the plan — which includes an estimated $500B in new spending and tax breaks over a decade — to secure the EU's industrial leadership in the fast-growing net-zero technology sector.[5]
    • The International Energy Agency estimates the global market for mass-produced clean energy will triple to around $650B a year by 2030.[6]


    Narrative A

    US green subsidies — which offer incentives for US buyers of electric vehicles if they "Buy American" — and unfair competition from China threaten the EU's industries as they tend to leave European firms uncompetitive and lure investments to the US and Asia. As a result, the EU plan offers a global playing field.

    Narrative B

    The EU plan must be revisited as it only helps wealthy countries such as Germany, which have the fiscal capacity to invest in domestic firms. Not all EU countries can offer subsidies to the same extent as France or Germany. As the plan could entail further joint borrowing, the EU must use funds already approved instead of seeking more money.

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