The EU has already achieved during last four years several vital results in this sphere: speeding-up green and “clean” transition, lowering energy prices and addressing competition on global markets. Now it is the turn of decarbonising energy intensive industries.
Many of the EU-wide energy intensive industries have already achieved good results: e.g. replacing external fossil-based fertilizers (decarbonised fertilizers are now made in Europe), the first carbon-neutral cement factories are soon to be operating, out of 80 clean steel projects that have been announced worldwide, almost 50 are in Europe. However, still there are incredible challenges and stronger international competition; in order to overcome them these industry sectors need sufficient support from the EU funds and programs.
The key strategic energy-intensive industries include several important national economy’s sectors, e.g. metals, fertilizers, ceramic, cement, refineries, chemicals, glass, lime, waste, pulp and paper, as well as alternative energy carriers; besides, these sectors also produce clean energy…
Mitigating negative impacts
In order to mitigate the negative impacts of modern challenges on European businesses, the Commission put in place a number of measures, including:
= Emergency measures to ensure the security of gas and electricity supplies and limit price volatility.
= EU-wide, temporary crisis and transition framework aimed to assist the states in supporting businesses suffering from high energy prices, and those making efforts to transition towards cleaner energy sources.
= Committing European financing to help energy-intensive sectors, for example through the Innovation fund.
However, the EU institutions have to accelerate the green transition; in particular, to scale up renewables, improve energy efficiency, invest in energy storage solutions and in hydrogen, as well as enhancing national manufacturing capacity of clean technologies.
For example, the Commission is eager to reform the member states’ electricity, gas and hydrogen markets to boost investment in cheaper, renewable and decarbonised sources of energy.
More on the issue in: https://ec.europa.eu/commission/presscorner/detail/da/speech_23_6218
Speeding-up green transition
One of the European Green Deal’s priorities is to provide certainty in the decarbonising processes in renewables and clean hydrogen, in setting targets for carbon capture and storage; the latter, i.e. Carbon Capture Usage and Storage, CCUS is specifically vital for renewables and for the energy grids. As soon as the lack of critical infrastructure is one of the main bottlenecks in the sector, the EU proposed an extension of the emergency regulation on permitions and state aid to bring more renewable projects online.
The Commission has also mobilized massive investments to back up this work through the EU-wide Innovation Fund and about €17 billion from the EU recovery plan, the NextGenerationEU, to facilitate decarbonisation of European industries, with a strong focus on hard-to-abate sectors. Particularly substantial is the “state aid” for these sectors: additional billion euros for hydrogen projects and €37 billion for energy intensive industries, which is on top of the support that all industries have received to face high energy prices.
In November 2023, the Commission launched €800 million auction under the Hydrogen Bank’s initiative with the first part of €3 billion value; in spring 2024, the next auction will be launched to complete the “hydrogen’s assignment”. Besides, the Commission made agreements with other countries around the world (e.g. with Canada) in order to boost transatlantic hydrogen trade and scale up this strategic part of renewable energy’s industry.
Lowering energy prices
During last two years, the EU managed to bring energy prices under control, diversify EU-wide gas supply, saving energy and massively investing in renewables; the EU has also arranged a common system of purchased gas for the member states. These and other measures have brought the energy prices back to posy-pandemic levels.
To assist the states, the Commission has prolonged the Temporary Crisis Framework until June 2024, so that the energy-intensive sector can continue receiving state aid throughout the winter, to compensate for high energy prices. However, the real long-term solution for the member states is to bring prices down by keeping investing in home-grown clean energy.
Since the European Green Deal, the states managed to more than double the amount of solar energy: e.g. for the first time ever, the EU produced more electricity from sun and wind than from gas.
Besides, the EU is in the process of reforming the EU-wide electricity market, as the member states have been often suffering from higher energy prices than other world regions; it is noted by the Commission that with active development of renewable sector and low carbon energy, the states “can re-balance the playing field”.
To secure energy-industry’s competitiveness the EU adopted the Net Zero Industrial Act, which is positioning Europe as a global hub for clean technology and industrial innovation.
Some other measures and tools could assist energy sector’s competitiveness globally, e.g. the established Carbon Border Adjustment Mechanism, CBAM.
Reference to: https://ec.europa.eu/commission/presscorner/detail/da/speech_23_6218
Addressing global competition
Protecting sectoral competitiveness means protecting the national economies and the EU-wide industry. The EU wants to lead the way towards a net-zero economy; and the states’ industries have made huge efforts to contribute to this goal.
The UN Climate Conference, i.e. COP-28 at the first day adopted a “rescue fund” to assist less developing countries suffering from climate crisis. The EU also wants to launch a coalition of countries that will make joint efforts to create a just carbon pricing systems; the IMF, the World Bank and the WTO will hopefully join the EU in boosting this agenda. It would be a decisive step towards global net-zero industries, and fairer international competition, acknowledged the Commission president.
General reference and source, Commission press release at: https://ec.europa.eu/commission/presscorner/detail/en/speech_23_6202