Russwurm criticizes the Europeans’ focus on money and subsidies.
(Photo: dpa)
Berlin If Siegfried Russwurm, President of the Federation of German Industries (BDI), and Fredrik Persson, President of the European umbrella organization Business Europe, had one wish for politicians, it would not be money. Rather, they would cut bureaucracy and over-regulation to move Europe forward. In an interview with the Handelsblatt, the heads of BDI and Business Europe call for a more pragmatic style of politics in Europe.
“Europeans’ focus is too narrow on money and subsidies. Other aspects are neglected,” says Russwurm. Americans would ask companies willing to invest what they could do for these companies. Europeans tended to ask first about the negative effects of an investment. “These are two completely different approaches,” says Russwurm.
If you want to invest, you have to allow for speed and pay attention to lean, efficient regulation. “The Americans do that much better than we Europeans. The planning and approval procedures for industrial projects, for energy production plants and for the required infrastructure take far too long,” says the BDI President.
At least politicians have recognized the problem, in Germany the acceleration of planning and approval procedures has moved up the political agenda. With the “Easter package” last year, the traffic light coalition decided on a series of acceleration measures for the expansion of renewable energies.
In addition, there is the EU emergency regulation passed by the EU Council of Energy Ministers at the end of last year, which is also intended to promote the expansion of renewable energies. In addition, the federal government is working on accelerating the planning and approval procedures for infrastructure projects. However, the coalition partners are still debating which projects are to be included.
A “toxic combination” for Europe
Fredrik Persson, Head of Business Europe since July 2022, analyzes the situation in a similar way to Russwurm. “Europeans tend to over-regulate and are way too slow with their approval processes. This location weakness cannot be compensated for with all the money in the world,” says Persson.
The president of the Business Europe trade association finds the EU’s response to the US IRA too timid.
(Photo: BusinessEurope)
Together with the high energy prices and the attractive investment conditions that the Americans have created with the “Inflation Reduction Act” (IRA), a “toxic combination” is emerging for the Europeans.
Russwurm does not consider the European responses to high energy prices and the IRA to be decisive enough. “Things are moving in the right direction, but still far too slowly. Our continent must become more competitive, and attractive framework conditions are the be-all and end-all for this,” he says.
Business and politics in Europe have been looking at the development triggered by the IRA in the USA for months. The subsidy program is intended to promote the green transformation of the US economy.
>> Read here: The Big Comparison – US and EU Green Subsidy Spending
The specifications for the companies are simply regulated, such as for CO2 storage or the development of a value chain for climate-neutral hydrogen. While the Europeans make strict specifications and place high demands on the electricity that is needed for hydrogen electrolysis, the Americans do not have such restrictions.
BDI President welcomes the EU’s hydrogen definition
Just a few days ago, the EU Commission set out in a “delegated act” how “green” hydrogen is defined in Europe. From 2028 onwards, the electricity used for hydrogen electrolysis must come from renewable electricity sources that are not publicly funded. By 2029, electricity must be produced in the same month as hydrogen, and from 2030 even in the same hour.
Russwurm welcomes the fact that at least there is now clarity about the conditions. “This reduces the uncertainty of the past few months – that alone is a huge step forward. The biggest obstacle to investing is uncertainty. And it’s now smaller,” says Russwurm.
However, the regulations are by no means supportive enough to be able to expect a breakthrough for the development of an industrial hydrogen value chain in Europe.
>> Read here: Von der Leyen wants to strengthen the EU in competition with China and the USA
According to Persson, the EU’s response to the IRA is too tentative. The “Green Deal Industrial Plan” recently presented by the EU Commission is a good start, but not enough. “It’s always the same: great speeches must be followed by great deeds,” says Persson.
The aim of the EU Commission is to create a favorable environment for the development of clean technologies with the industrial plan. According to the EU Commission, these are necessary “in order to achieve Europe’s ambitious green goals”. However, many details are still unclear.
More: Three scenarios for the future of German industry