The European Commission has published the Green Deal Industrial Plan based on the idea of developing a ‘Single Market,’ which will utilize €250 billion (~$274.96 billion) of existing EU funds to safeguard and enhance the competitiveness of its clean energy industry.

With the help of proposed strategies like the Net Zero Industry Plan, Critical Raw Materials Act, REPowerEU, the EU Sovereignty Fund, and the revised Temporary Crisis and Transition Framework, the plan will help keep a majority of investments for cleantech within the region.

The Commission plans to mobilize the existing funds of €250 billion (~$274.96 billion) available under the REPowerEU plan and another €372 billion (~$409.14 billion) under the InvestEU plan.

Previously announced by Commission President von der Leyen at the World Economic Forum in Davos in January 2023, the plan aims to tackle the protectionist programs by China and the U.S.

The president said that the plan would help the EU avoid ‘investment leakage’ into the U.S. due to the latter’s Inflation Reduction Act (IRA). EU sees the subsidies announced under the IRA as a threat to competition in the EU’s single market.

The Green Deal Industrial Plan is designed to provide a more supportive environment for scaling up the EU’s manufacturing capacity for net-zero technologies and products. Its four pillars are — a predictable and simplified regulatory environment, speeding up access to finance, enhancing skills, and open trade for resilient supply chains.

Regulatory Framework

In addition to the previous announcement, the Commission said it would propose a Net-Zero Industry Act to identify goals for net-zero industrial capacity and provide a regulatory framework suited for its rapid development and ensure fast-track approvals. It aims to promote European strategic projects and develop standards to support the scale-up of technologies across the ‘Single Market.’

The act would provide a simplified regulatory framework for the production capacity of products that are key to meeting the region’s climate neutrality goals, such as batteries, windmills, heat pumps, solar, electrolyzers, carbon capture, and storage technologies.

The framework will be complemented by the Critical Raw Materials Act, which will ensure sufficient access to rare earths and similar raw materials vital for manufacturing key technologies and help lower the cost of renewables for consumers.

Funding

The second pillar would help unlock private financing for green transition through the European Capital Markets Union, in conjunction with public funding. Under the competition policy, the Commission aims to make it easier for the member states to grant necessary aid to accelerate the green transition.

The Commission will consult the member states on an amended Temporary State Aid Crisis and Transition Framework. It will revise the General Block Exemption Regulation in light of the Green Deal, increasing notification thresholds for support for green investments.

The Commission will also facilitate the use of existing EU funds of €250 billion (~$274.96 billion) under the Recovery and Resilience plans (RRF) for cleantech innovation, manufacturing, and deployment.

For the mid-term, the Commission intends to propose a European Sovereignty Fund to be reviewed as a multi-annual financial framework before summer 2023.

The Commission also adopted new guidance on recovery and resilience plans and will modify the existing ones in the REPowerEU chapters to help member states access the funds under the program.

The Commission plans to launch its first auction for the production of renewable hydrogen in the autumn of 2023 and the winners of this auction will receive a fixed premium for each kg of renewable hydrogen produced over a period of ten years. Further building on this experience, the Commission considers extending the new competitive bidding mechanism for scaling up manufacturing of components for solar and wind energy, batteries, and electrolyzers, based on an analysis of EU net-zero sector needs, market sizing, and potential project pipeline.

Skill Development

The third pillar will focus on developing skills to manage jobs affected by the green transition. The Commission plans to establish Net-Zero Industry Academies to roll out up-skilling and re-skilling programs in strategic industries.

It would also consider how to combine a ‘Skills-first’ approach, recognizing actual skills, with existing approaches based on qualifications and how to facilitate access of third-country nationals to EU labor markets in priority sectors as well as measures to foster and align public and private funding for skills development.

Open Trade

The fourth pillar will support global cooperation and make trade work for the green transition under the principles of fair competition and open trade, building on engagements with the EU’s partners and the work of the World Trade Organization.

The Commission will continue to develop the EU’s network of Free Trade Agreements and other forms of cooperation with partners to support the green transition.

It will also explore the creation of a Critical Raw Material Club to bring together raw material consumers and resource-rich countries to ensure the security of global supply through a competitive and diversified industrial base and clean tech/net-zero industrial partnerships.

Mercom recently reported on how the Inflation Reduction Act rankled Europe and other parts of the world for its protectionist intent.

China recently announced that it is contemplating restricting exports of critical technology related to solar photovoltaic components. If implemented, it would restrict local manufacturers from exporting the technology over which China has a stranglehold.