“The era of cheap fossil fuels is over,” says dpa in the plan, according to which industry has to invest 170 billion euros in wind farms, solar systems, batteries, heat pumps and hydrogen by 2030 so that industry in the EU remains competitive. The money for the projects is to be reallocated from existing pots or mobilized from private sources.
In particular, the “Green Deal Industrial Plan” does not envisage any new debts – recently a central point of contention between the member states. As a first measure, they should rather be allowed to promote the corresponding industries more intensively. In addition, money from the CoV aid fund worth a total of 800 billion euros should be able to be reallocated.
Response to US climate package
The Commission is working to speed up procedures, particularly related to the transition to climate-friendly technologies and digitalisation, Economy Commissioner Paolo Gentiloni said on Tuesday. The EU is not interested in a subsidy race with the USA.
The USA’s Inflation Reduction Act (IRA) is a strong commitment to green technologies – but one consequence for the EU are additional challenges. Gentiloni said the EU is too dependent on China in some areas.
The IRA – the slimmed-down version of US President Joe Biden’s Build Back Better package approved in August 2022 – contains subsidies worth 369 billion dollars (340 billion euros).
Brussels locates discrimination
However, the condition for the huge subsidies is that the companies produce in the USA. This also excludes European companies from the attractive US market – which is seen as discriminatory in Brussels.
The Financial Times (FT) quoted Commission Vice-President Margrethe Vestager as saying that the EU now also wants to “grant investment aid in the form of tax credits if that is more convenient for companies”. According to the “FT”, the aim of the planned measures is to respond to the warnings that companies from the EU could migrate to the USA.
Because the United States has been luring European companies active in the field of green energy and climate protection to the USA for months with huge subsidies. Low energy prices in the US are also considered tempting, so the IRA could have a “toxic” effect on some European industries, according to the FT.
USA second largest greenhouse gas emitter in the world
Since the IRA was passed by the US Congress at the end of 2022, some EU member states have sounded the alarm and drummed the start of a new trade war, writes the US magazine Foreign Affairs. This is surprising given that Europe has long wanted the US to take more serious action on climate change.
As the world’s largest economy and second largest greenhouse gas emitter, the USA plays a crucial role in the fight against global warming. With 14.04 tons of CO2 emissions per capita, the country in North America is one of the international leaders. Estimates suggest the IRA could cut US emissions by about 40 percent by 2030 from 2005 levels, bringing Biden very close to his goal of halving US emissions by the end of the decade, the Guardian writes “.
In order to meet the EU’s climate goals of reducing emissions to zero by 2050, according to official estimates, 447 billion euros more must be invested per year in Europe. According to the Vienna Institute for International Economic Comparisons (wiiw), the challenges are particularly great in the transport and energy sectors. In addition, the EU must ensure that the measures adopted are also implemented by the member states, the Climate Action Tracker demanded as early as 2021.
Renewables as a geopolitical opportunity
With the goal of climate neutrality by 2050, the EU not only wants to combat global warming, but also be at the forefront of the global competition for new green markets with China and the USA, according to the “Neue Zürcher Zeitung” (“NZZ”). . The fact that the USA now also wants to take climate protection seriously and sees it as an industrial and geopolitical opportunity takes Brussels by surprise.
Some observers are also reminded of the protectionist efforts of former US President Donald Trump, who pursued a restrictive trade policy under the motto “America First”. The current “green-colored protectionism” of the Americans now threatens not only the European self-image, but also the EU as an industrial location, according to the “NZZ”. For example, French President Emmanuel Macron warned of job losses in Europe in December and said the IRA would “fragment the West”.
Global cooperation necessary
The picture doesn’t have to be so bleak, writes “Foreign Affairs”: More national measures for climate protection and incentive systems are necessary, but do not rule out cooperation with other countries. Subsidized products that are manufactured in the USA do not necessarily have to be manufactured by US companies, and European companies could therefore also benefit from the advantages of the IRA.
Decarbonizing the entire world is also a challenge that can only be achieved through a joint effort. After all, zero-carbon industries are far from having the necessary reach and scope to actually meet consumer demand. The two continents would share common goals – in particular, to reduce dependence on China, the world’s largest emitter of greenhouse gases, according to the “NZZ”.
Climate targets “too important to be overshadowed”
The climate policy challenges are too important to be overshadowed by trade and competition policy disputes, the “NZZ” quoted the economist Dani Rodrik. The goals of the Paris Agreement are far from being achieved and emissions must fall more and more quickly.
While Chinese subsidies for solar and wind power have disadvantaged some Western companies, they are “one of the best things a government has ever done to combat climate change” – because the support has helped to reduce the cost of solar energy by 90 percent reduce and halve the price of wind energy. Today, these technologies could compete with fossil fuels.
Last summer, the USA and the EU showed how increased cooperation in the field of climate protection could look like: The two great powers would “jointly represent 780 million people who not only share democratic values, but also the strongest economic relationship in the world”. , it said in a statement of the “Renewal of the Transatlantic Partnership”. Both have “the opportunity and the responsibility to support people in terms of work and security, to fight climate change and to represent democracy and humanitarian values”.
