BRUSSELS (Reuters) – The European Commission will present plans on Wednesday to try to ensure Europe can compete with the United States as a manufacturing hub for electric vehicles and other green products and reduce its dependence on China.
Commission President Ursula von der Leyen is expected to announce an easing of EU state aid rules, a redirection of existing EU funds, faster approval of green projects and initiatives to boost skills and seal commercial agreements to ensure the supply of critical raw materials.
The plan is partly a response to multi-trillion dollar support programs from China and the United States, including the latter’s Inflation Reduction Act.
Many EU leaders worry that the local content requirements of its $369 billion in green subsidies will encourage companies to relocate, making the United States a leader in green technology at Europe’s expense.
The International Energy Agency estimates that the global market for mass-produced clean energy will triple to around $650 billion a year by 2030, and related manufacturing jobs will more than double. The European Union wants a piece of the action.
The Commission is prepared to propose relaxing state aid rules for investments in renewable energy or the decarbonisation industry, while acknowledging that not all EU countries will be able to offer subsidies to the same extent as France or Germany.
In the short term, EU members could, for example, draw on some €225bn ($244.15bn) of remaining loans from the €800bn Post-COVID Recovery Fund.
In the longer term, the Commission will propose the creation of a European Sovereignty Fund to invest in emerging technologies.
In the coming months, the Commission will propose a Net-Zero Industry Act that could streamline permitting processes and harmonize standards, and a Critical Raw Materials Act to promote local extraction, processing, and recycling.
The block is heavily dependent on China for rare earths and lithium, which are vital materials for the green transition.
The EU executive also wants to seal more free trade deals and partnerships to make supply chains more resilient and open markets for green products.
(Reporting by Philip Blenkinsop; Editing by Barbara Lewis)
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