EU Announces €240 billion Green Industrial Plan to Counter US Tax incentives
The European Union reacted to the Biden Administration's expansive green subsidy program by introducing their own "Green Deal" on Wednesday, which includes cutting bureaucratic regulations and providing tax deductions.
The European Commission declared in a statement that the Green Deal Industrial Plan will bolster the competitiveness of Europe's net-zero industry by simplifying regulations, expediting access to financing, developing skills, and constructing "resilient" supply chains via new trade agreements.
The plans, to be discussed by EU heads of state in the upcoming week, provide €250 billion ($272 billion) from EU monies already in existence to support the greening of the industrial sector, including providing tax incentives to companies investing in technologies that offset carbon emissions.
At a press conference on Wednesday, President of the European Commission Ursula von der Leyen declared that the set of actions they are taking will ensure a fair worldwide competition. She further stated that "Europe is determined to drive the green technology revolution".
A photo taken on January 13, 2023 is shown below, revealing an aerial view of cranes and shipping containers at the port of Lianyungang, located in China's eastern Jiangsu province.
EU leaders have emphasised the necessity of introducing a significant investment package for green initiatives in response to the Inflation Reduction Act -- the US government's primary climate law that is funneling $369 billion towards clean energy ventures.
Concerns have been raised by European leaders that the $270 billion of tax cuts given to American companies could put European firms at a disadvantage and draw them to the US.
At the World Economic Forum in Davos last month, various EU representatives expressed their disapproval of the Inflation Reduction Act, prompting speculations that a retaliatory subsidy battle may be in the works.
At a panel discussion, Valdis Dombrovskis, the EU Commissioner for Trade, praised the United States for making the largest climate investment in history, yet Europe is apprehensive that it is done in a discriminatory way.
He remarked that not only does it not aid in constructing transatlantic value chains related to the green transition, but it is, in fact, cutting them off.
Sweden is set to become the home of the world's largest rare earth mine in 2023, which could reduce China's dependence on the minerals. This comes as the European Union looks to reduce its reliance on the Asian country for vital components used in high-tech products such as smartphones and electric cars. The mine, which is located in northern Sweden, is expected to produce 20,000 tonnes of rare earth minerals every year.
The European Commission's new green industry plan noted that China has been subsidizing green industries at a rate double the amount that the EU does, proportionate to GDP. It was also noted that "Europe and its allied nations must take further steps to counter the effects of such biased subsidies and prolonged market interference."
The European Union's environmental strategy suggests that rules for state aid be relaxed, so that member states can provide the same amount of aid as a non-EU country does for initial investments in certain sectors deemed to be connected to achieving net-zero emissions.
The European Sovereignty Fund has been established to guarantee that Europe stays ahead in the development of "vital and emerging technologies" such as microelectronics and AI.
The plan includes the Net Zero Industry Act, which would expedite the processing of permits for eco-friendly initiatives, and the Critical Raw Materials Act, which would look to guarantee the EU's access to rare earth minerals essential for the creation of net-zero technologies.