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Industrial development in the EU member states has a vital role in the green transition. Besides, with a view to a sustainable Europe, the “green deal” remains the EU-wide industry and growth strategy. Current geopolitical context has strengthened the intentions to maintain boosting Europe’s global position in strategic zero and low carbon energy technologies. The Commission also puts in place a regulatory framework that brings stability and predictability to the green agenda.
Background
The European “green deal” was designed as the EU’s compass to make Europe the first climate-neutral continent in the world. It aims at transforming Europe into a clean, resource-efficient and competitive economy. To ensure its smooth implementation, the Commission has launched a series of Clean Transition Dialogues with key industrial sectors. It is crucial the European industry remains competitive and the transition is socially fair and inclusive for all; the first Clean Transition Dialogue, on Hydrogen took place in October 2023.
Through these Dialogues, the Commission is working closely with industry to build a business model fit for a decarbonised economy’ as soon as the regulatory framework is in place, the EU institutions will continue to strengthen collaboration with industry and social partners to implement the European green deal in the most effective way.
The EU’s concept is that the decarbonisation process must be driven increasingly by market forces, in addition to targets and regulation: hence, the member states have to strengthen the business community for the “clean-tech” approach and for the decarbonisation of the energy intensive industry.
This is particularly important as the EU is –presently- in the implementation phase of the “green deal”, which – from the industrial perspective – means active scaling-up of all manufacturing capacities in the member states.
Source: https://ec.europa.eu/commission/presscorner/detail/en/IP_24_1884
The EU-wide perspectives
There are the following European priorities concerning the twin transition:
a) delivering an effective and simplified regulatory framework for businesses to deliver on the transition,
b) taking action on energy prices to ensure abundant and affordable clean energy,
c) building modern infrastructure as a backbone for EU industry,
d) unlocking finance for the transition, and
e) leveraging the clean Single Market in a globally competitive environment.
Some detailed clarifications follow:
= First, an effective and simplified regulatory framework: stakeholders, generally, are quite satisfied with the existing EU-wide rules; besides, they are being aware presently about the direction of any possible legislative efforts. However, they also seek the EU’s support to help them in complying and delivery.
Thus, the Commission will further focus on burden reduction: i.e. in the ongoing actions, such as reducing burden from reporting requirements by 25 percent without undermining its political objectives.
= Second, stable energy prices: the stakeholders require that the EU will address uncompetitive energy costs, hampering investments in the clean tech sector and in the energy intensive industries. The EU has had already a good regulatory framework, such as the Electricity Market Design, the revised Renewable Energy Directive and the Net Zero Industry Directive, accompanied by the Wind Action Plan, Girds Action Plan and other tools. However, the states and corporate community would need some additional targeted and temporary measures: i.e. it is regarded as suggestion from the industrial sectors; after all, the EU industry employs some 35 million people in the member states.
= Third, modern infrastructure: the underdeveloped energy infrastructure, especially at the distribution level, can create bottlenecks in the green transition and electrification of the economy sectors in the states. Hence, the EU has to accelerate the roll out of energy and transport infrastructures.
= Fourth, easier access to finance: the private sector will have a key role to play in deploying investment in the clean transition. However, the EU has also to provide greater public support to those clean tech sectors where market failures exist: i.e. some sectors are not yet commercially viable; therefore, the EU have to stimulate investment and help to build future markets (a viable example is that of the European Hydrogen Bank). Achieving a deep and integrated Capital Markets Union is another urgent priority to inject new funds into Europe’s green economy.
= Fifth, a stronger EU-wide single market: actions towards creating a single market for clean tech and sustainable technologies in Europe shall be strengthen, following the SDGs requirements. In practice, it includes boosting demand and off-take for these products to scale up manufacturing of clean products in Europe, improving the businesses and consequently reducing the need for state/public support and intervention.
=Finally, the EU single market must be part of a global level playing field for European businesses: i.e. the EU institutions should address the increasingly distorted global trade. Thus, the Commission needs to more efficiently and flexibly use external trade defence measures to address dumping of subsidized and unsustainably produced goods on the EU and global market.
For example, the EU has to urgently address the global carbon pricing, which remains essential not only for achieving the European climate ambitions but also for preventing carbon leakage.
Main source: https://ec.europa.eu/commission/presscorner/detail/da/speech_24_1949
German’s example
The European Commission has approved a €2.2 billion German national scheme (10.04.2024) to support investments in the decarbonisation of industrial production processes to foster the transition to a net-zero economy, in line with the Green Deal Industrial Plan.
The scheme was approved under the State aid Temporary Crisis and Transition Framework, adopted by the Commission on 9 March 2023 and amended on 20 November 2023, to support measures in sectors which form the background of accelerated green transition and, at the same time, reduce fossil fuel dependencies.
The aid will take the form of direct grants: the measure will be open to companies relying on the use of fossil fuels as energy source or feedstock for their production processes in the industrial sector in Germany. Eligible projects must lead to a reduction of greenhouse gas emissions from production processes of at least 40 percent compared to the present level.
To be eligible, German companies need to either electrify their production processes, or switch from the use of fossil fuels to renewable hydrogen or renewable hydrogen-derived fuels.
Furthermore, the aid will be subject to conditions to ensure actual emissions savings and to limit undue distortions of competition.
For investments relating to activities covered by the EU Emission Trading System, ETS the emissions reduction must go below the relevant ETS benchmarks in force at the time of granting the aid. In addition, the beneficiaries will not be able to increase their production capacity beyond 2 percent.
Source: https://ec.europa.eu/commission/presscorner/detail/en/IP_24_1889