EU Commission chief Ursula von der Leyen announces green industrial plan

davos EU Commission President Ursula von der Leyen has spoken out in favor of extensive industrial policy interventions in order to advance Europe in the global race for climate-friendly technologies. With the right support for companies, “the history of the clean technology economy in Europe will be written,” said von der Leyen at the World Economic Forum in Davos.

Praise for von der Leyen’s initiative promptly came from the federal government. “I expressly welcome the plan. That was a very important signal in Davos today,” Economics Minister Robert Habeck (Greens) told Handelsblatt.

Von der Leyen’s idea consists of four parts: The commission wants to speed up the construction of new wind farms or battery factories, promote environmentally friendly technologies, qualify employees and conclude new trade agreements with other countries.

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Stefan Schaible, head of the consulting firm Roland Berger, told Handelsblatt: “Finding an answer to the IRA is the vital question of the European economy.” Support through subsidies and tax breaks is one thing. But just as important is a smart industrial policy geared towards innovation.

Von der Leyen: Facilitate funding for environmentally friendly technologies

“We need to create a regulatory environment that allows us to expand rapidly and create favorable conditions for crucial industries,” von der Leyen said, referring to the need to accelerate the construction of wind farms and battery factories. The Commission will propose a new “net-zero industry law” – modeled on the “European Chips Act”, which is intended to boost semiconductor production in Europe.

The law should also go hand in hand with the “Raw Materials Act”, which is intended to improve Europe’s access to critical raw materials. “For rare earths, Europe is now 98 percent dependent on one country – China,” warned von der Leyen. This has driven up prices and is threatening Europe’s competitiveness. Refinement, processing and recycling of raw materials must be improved in Europe.

Robert Habeck

The German Economics Minister supported von der Leyen’s initiative in Davos.

(Photo: AP)

On the promotion of environmentally friendly technologies, the head of the Commission said: “In order for European industry to remain attractive, it is necessary to keep up with offers and incentives outside the EU.” She was referring to the IRA, the US support program. Von der Leyen therefore wants “temporary” adjustments to competition law in order to make aid faster and easier.

Unlike in the past, not only groundbreaking technological developments are to be promoted, but also technologies that are already on the market and for which Europe wants to create more production facilities.

The third part is the qualification of employees. “The best technology is only as good as the skilled workers who can install and operate it,” said von der Leyen. Growth in future technologies is only possible with an enormous increase in qualified workers.

EU industrial policy could overwhelm some member states

As a fourth part, new trade agreements are to form the basis for “strong and crisis-resistant supply chains”. Agreements with Mexico, Chile, New Zealand and Australia are in the works, progress is possible with India and Indonesia.

>> Read also: The EU Commission wants to brace itself against the USA with new debts

The Mercosur agreement with the most important economies in Latin America must also be an issue again, von der Leyen demanded. “International trade is key to driving down costs for our industry to create jobs and develop new products.”

Such an industrial plan is likely to pose major challenges for the EU internal market. By no means all member states can afford an industrial policy worth billions. The EU Commission had therefore already proposed a sovereignty fund so that as many member states as possible would benefit from a forced industrial policy. Internal Market Commissioner Thierry Breton has already collected ideas for this.

Thierry Breton

The Frenchman is already collecting ideas on how the industrial plan could be financed at EU level.

(Photo: Reuters)

For example, the European Investment Bank could provide loans, and previously unused funds from the Corona recovery fund could be reallocated. Breton also shows sympathy for joint debts.

Economics Minister Habeck agrees: “The plan is necessary for a strong and climate-neutral Europe and is more important than ever right now, in order to consistently look ahead in addition to acute crisis aid.” The proposals matched what the federal government had worked out. “Europe will not lose the competition,” said Habeck.

But the question of whether the EU should take on new joint debt is threatening a dispute. In Germany, the FDP in particular is blocking the move, and the Dutch are also against it.

More: France wants to revolutionize Europe’s industrial policy – but the federal government is skeptical

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