EU lays out green industry plan to counter U.S., China subsidies

BRUSSELS, February 1 (Reuters) – The European Commission proposed a plan on Wednesday to try to enable Europe to compete with the United States as a production center for electric vehicles and other green products and reduce its dependence on China.

Commission President Ursula von der Leyen announced the relaxation of EU state aid rules, the reallocation of existing EU funding, the rapid approval of green projects and drivers to increase efficiency and the sealing of trade agreements to secure the supply of critical raw materials.

The plan is partly a response to China and the United States’ multibillion-dollar stimulus programs, including the recent Inflation Relief Act.

“We are competitive… what we look at is that we have a global playing field,” von der Leyen told a news conference.

Many EU leaders are concerned that local content requirements for 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, with associated production jobs more than doubling. The European Union wants a piece of the action.

The Commission has proposed to relax state aid rules for investments in renewable energy or decarbonisation industries, on a temporary basis, until the end of 2025, while acknowledging that not all EU countries will be able to do as much as France or Germany. offer help.

In the short term, EU members could, for example, use some 225 billion euros ($244.15 billion) in loans left over from the 800 billion euro post-Covid Recovery Fund.

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The European Commission hopes member states will support its plan at a summit on February 9-10, but large parts are likely to be hotly debated among member states.

Some EU members have already expressed resistance to parts of the plan, particularly the easing of state aid rules and the prospect that big countries such as France and Germany will be able to outspend others.

There is also clear opposition from some EU members to earlier proposals that the plan could include additional joint debt.

In the longer term, the Commission will propose the creation of a European Sovereign Fund to invest in innovative 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 bloc is heavily dependent on China for rare earths and lithium, which are important materials for the green transition.

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The EU regulator also wants to seal more free trade agreements and partnerships to make supply chains more resilient and open up markets for green goods.

Meanwhile, German chip supplier ZF Friedrichshafen [RIC:RIC:ZFF.UL] and U.S. chipmaker Wolfspeed ( WOLF.N ) will announce plans on Wednesday to build an electric vehicle chip factory in the Saarland region, according to three sources close to the matter.

A German government source said: “Amid concerns that the US wants to drive investments away from Europe with its Anti-Inflation Act, we show that an American company wants to invest in Germany.”

($1 = 0.9216 euro)

Additional reporting by Marine Strauss, Kate Abnett; edited by Barbara Lewis and Ingrid Melander

Our Standards: The Thomson Reuters Trust Principles.


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