The head of the EU has called for a new law to boost cleantech funding to match a US climate law that unfairly subsidises US firms.
The US recently announced its Inflation Reduction Act, a $369 billion cleantech investment plan that aims to accelerate net zero industries in America. But EU leaders fear it unfairly subsidises US companies at the expense of other countries’ commercial endeavours.
In a keynote speech at the DAVOS 2023 economic summit Ursula von der Leyen, president of the European Commission, raised concerns about the new US law and called for the EU to pass its own, similar, law.
“Certain elements of the design of the Inflation Reduction Act raised a number of concerns in terms of some of the targeted incentives for companies,” von der Leyen said. “This is why we have been working with our US friends to find solutions. For example, so that EU companies and EU-made electric cars can also benefit from the Inflation Reduction Act. Our aim should be to avoid disruptions in transatlantic trade and investment. We should ensure that our respective incentive programmes are fair and mutually reinforced and we should also set out how we can jointly benefit from this massive investment. For example by creating economies of scale across the Atlantic, offsetting common standards. At the heart of the joint vision is our conviction that competition and trade are the keys to speeding up cleantech and climate neutrality.”
Europeans need to get better at nurturing its’ own cleantech industry, von der Leyen urged.
International energy agencies estimate that the market for mass-manufactured clean energy tech will be worth around $650 billion a year by 2030, more than triple today’s levels. “To get ahead of the competition we need to keep investing and strengthening our industrial base and making Europe more investment and innovation-friendly and that is what investors are looking closely at in the different markets for cleantech.”
Europe introduced the European Green Deal to set the path to climate neutrality by 2050 and set Net Zero targets into law to provide the predictability and transparency that businesses need. “We followed up with our information innovations and investment. This is an unprecedented investment in clean technology across all sectors of the green transition. Cleantech is now the fastest-growing investment sector in Europe, doubling its value between 2020 and 2021 alone. And the good news for the planet is that other major economies are also stepping up.”
Japan’s green transformation plan aims to help raise up to 20 trillion yen, around €140 billion, through green transition bonds. India has put forward the production-linked incentive scheme to enhance competitiveness in sectors such as solar and batteries. The UK, Canada and many others have put forward their investment plans in cleantech. The European and the United States alone are putting forward almost €1 trillion to accelerate the clean energy economy.
“We know that we have a small window to invest in clean energy and innovation and cleantech before the fossil fuel economy becomes obsolete,” said von der Leyen, “We have a compelling need to make this Net Zero transition without creating new dependencies. We have learnt our lessons from fossil fuels and we know that future investment decisions will be taken now, depending on what we do today. Europeans have a plan, a Green Deal Industrial plan covering four different pillars: the regulatory environment; financing; skills; and trade. Our plan is to make Europe the home of cleantech and industrial innovation.”
