No Green Deal without strong European clean tech manufacturing I Blog of Commissioner Thierry Breton

With the Green Deal Industrial Plan announced today, the Commission presents a blueprint to ensure that our climate neutrality ambitions translate into competitiveness and jobs.

On the digital front, under the Digital Decade we set the objective of doubling the EU's global market share in semiconductors to 20% by 2030. To translate this ambition into reality, we quickly proposed the EU Chips Act to build a thriving semiconductor sector from research to production and a resilient supply chain.

Now, with the Green Deal Industrial Plan, we are ensuring that decoupling from Russian fossil fuels and reaching our ambition of becoming a climate-neutral continent by 2050 does not compromise our security of supply and is underpinned by a competitive industry that creates quality jobs.

Putting manufacturing capacity at the heart of the Green Deal

Clean technologies such as batteries, windmills, heat pumps, solar panels, electrolysers, carbon capture and storage technologies are vital to meet our climate neutrality goals. It is a growing market estimated at about €600 billion per year by 2030 globally – more than three times today's levels – accelerated by the Green Deal and our need to decouple from Russian energy. Without an industrial plan, there is a risk that we are creating a new market but actually handing that booming market – and related jobs – to others.

At a time when our industry is already struggling with higher energy prices than the rest of the world, many third countries are defining support measures which will put at risk our projects and attract our industrial capacity in this appealing sector. There is a real risk of deindustrialisation and divestments from Europe, with a negative impact on entire value chains and SMEs. And it is not just a temporary risk.

We have seen how our dependencies are used against us. We have learned (take the example of vaccine production) that without a strong manufacturing base, Europe's security of supply, export ability and job creation is at risk. We already see a trend emerging of being relegated to net importers of electric vehicles or solar panels, thus replacing our dependence on fossil fuels with industrial and technological dependencies. China produces 98% of the solar panels we use. And last year, China overtook Germany to become the world's second-largest car exporter, as even European manufacturers are now producing electric cars in China for our market.

So while our legislation already encourages the acceleration of the Green Deal and deployment of clean tech, we also need to build a strong manufacturing base – and by that I mean entire ecosystems with suppliers and SMEs – in clean technology.

It was time for Europe to develop its own industrial plan, which optimises existing instruments but also presents new measures – regulatory and financial – to encourage industrial manufacturing investment in Europe.  

We have described the Green Deal as Europe's growth strategy, but it is today that we take full concerted action to reconcile our climate neutrality ambitions with industrial competitiveness and job creation. Because the job potential of the clean transition is not only about deploying renewables faster. It is also about building the clean tech manufacturing capacity in the whole production chain, from raw materials to intermediate equipment.

Without an industrial plan for the Green Deal, we risk importing new dependencies, endangering our security of supply, reducing our export capacity, and exporting our jobs.

With the Net Zero Industry Act, we will make our procedures simpler, faster and more flexible to support mega-factory projects for the production of batteries, solar cells, hydrogen, wind turbines, as well as for all other projects needed in the related value chains. We will set manufacturing capacity targets, facilitate permitting, and use public procurement strategically. And it will go hand in hand with the Critical Raw Materials Act, because there will be no clean technology industry without secure and sustainable access to raw materials. 

Incentivising investment in clean tech production – to the benefit of all 27 EU Member States

With the Green Deal Industrial Plan, we are also putting the objective of a competitive clean tech industry with a strong manufacturing base at the heart of our efforts to improve access to finance – on capital markets, at national level, and through EU funding.

There has been a lot of focus on much-needed improvements to State aid policy, where Member States and industry recurrently asked for more predictability and simplification of procedures. It's not just a question of more public funding, but of directing it better. So that public money is spent intelligently and efficiently. All while avoiding a subsidy race within our own EU Single Market.

We are consulting Member States on amendments to the Temporary Crisis and Transition Framework to support clean tech manufacturing with what I see as three key improvements: ensuring that Member States can support investment production facilities, the possibility to match the aid that could be received in other countries, and incentives to continue investing in less developed regions.

But of course this greater flexibility in State aid, even if much needed to support clean tech manufacturing, also raises concerns, even if temporary and targeted, about who will actually benefit from it. There is a real risk that it is primarily the Member States that have fiscal space that will be able to use these provisions quickly.   

Europe has always found and should continue to work on common solutions, in unity and solidarity, in the common European interest.

Preserving unity and solidarity firstly requires some caution when handling figures. There has been a lot of talk about recent State aid approved under the currently applicable temporary framework benefitting primarily two large EU countries. That may be true in volume terms. But in economic terms, on the basis of GDP, the perspective is a little different, since the ranking is topped by Finland (9.4% of its GDP), followed by Germany (9.3%) and Denmark (8%). France, Italy and Spain come a long way behind. And if we look at taxpayer money spending per inhabitant, it is Denmark that is top of the list (€4603 per inhabitant), followed by Finland (€4251) and Germany (€4041 euro), while in the case of France we are talking about €2384 per inhabitant and in Italy or Spain less than €1000 euros.

So let's make no mistake, the most “gourmand” when it comes to State aid are those who like to call themselves “frugal”.

This sheds additional light on the need to avoid a fragmentation of the Single Market and support considerable investments in manufacturing of net-zero technologies with unity and solidarity.

Those who say there is already have a lot of EU money available are right. Or rather, we have a lot of debt available. But it is strongly geared towards deployment. So we need to optimise existing instruments and redirect them towards the manufacturing base.

And determine whether it will be enough. Work is ongoing to identify the investment needs, but if we look at the plans developed by the US (€340 billion), Japan (€140 billion) and China (€260 billion), and what the Canadians are about to do, my view is that we may be looking at between €350-400 billion investments to be mobilised in these clean technologies at European level. Looking at the remaining funds available under REPowerEU, NextGenerationEU or the Innovation Fund, my preliminary estimate is that there may be a shortfall of around €100 billion.

That is why we are also continuing to explore additional solutions to make sure to achieve greater common financing at EU level so that all Member States have access to necessary financing, catering for their different needs and preserving a level playing field.

---

With a common framework for industrial investment, I am confident that Europe will emerge not only carbon-neutral, but also stronger, competitive and united.