Clean Tech Europe, the EU’s answer to the Inflation Reduction Act?

Ahead of EU-US consultations, Single Market Commissioner Thierry Breton has launched a platform to take stock of the challenges facing Europe’s clean tech industry. Far from concrete, it promises neither funding nor legislation.

The USA’s flagship €369 billion climate and industry initiative – part of the Inflation Reduction Act (IRA) – has lit a fire under Berlin, Paris and Brussels. After years of tolerating concerted industrial policies from China, the push from Washington appears to have finally sparked action.

On Wednesday (30 November), Single Market Commissioner Thierry Breton kicked off the “Clean Tech Europe” initiative, which some call the EU’s defence against concerted industry policies from world powers, like the US and China.

“Europe is ready to pick up the pace significantly to ramp up the production of climate-relevant technologies,” explained Germany’s Robert Habeck, vice-chancellor and minister of economy and climate action.

“This is important because we need to assert our strategic and technological sovereignty in the green industry sector,” he added in a press statement on Thursday.

The initiative “will work with Member States, industry, and the EIB,” Breton said in Berlin on Tuesday.

Five key technologies for a “decarbonised and largely electrified continent by 2050” are spelt out: solar, wind, heat pumps, electrolysers, and electricity grids.

According to a concept paper seen by EURACTIV, the initiative plans for three, six and ten-month intervals.

In the next three months, the participants in the platform ought to map “short-term challenges” that arise from the energy crisis and third-country actions like “operational expenditure support and local-content requirements” – a clear nod to the USA’s Inflation Reduction Act.

In the next six months, they must identify “regulatory bottlenecks for investments in clean energy technology capacities,” how they can be supported through public procurement aid, address the wind industry’s supply chain challenges (including the price increases for materials), and identify the barriers to manufacturing heat pumps and electricity grids in the EU.

In the next ten months, the goal is to identify “investment needs for the scale up of EU value chains of transformational technologies” and the “most appropriate” form of support to speed it up, as well as looking at industrial needs for electricity grid integration.

At the initial kick-off, it was backed by Germany, France, Spain, the Netherlands, Czechia, Romania, Greece, and Lithuania. As Germany and France diverge significantly in various policy fields, hopes are high that an agreement that even they can find common ground on should be palatable to all other EU countries.

Aside from them, it was attended by various CEOs of European companies like Northvolt (a Swedish battery maker), Vestas (a Danish wind turbine maker), and Viessmann (a German boiler and heat pump manufacturer).

Wacker Chemie (a German chemicals company producing polysilicon for solar panels), and Schneider Electric (a French grid technology company) also attended. EURACTIV understands that Schneider replaced Enel, the Italian utility, late into the process.

The companies appear to approve of the proposal. “The time has come to think about a ‘Buy European Act’,” said Alix Chambris, vice-president of public affairs at the heat pump maker Viessmann.

“We should even consider a local content requirement for access to funding instruments (like in the US). No taboos!” she added.

The solar PV industry is hoping to receive support for operating expenses. Clean Tech Europe should “explore the EU’s State Aid rules and how to allow for targeted and proportionate support for operational expenditure given Europe’s energy costs,” a spokesperson told EURACTIV on behalf of Solar Power Europe.

The question of funding

The elephant in the room on Wednesday, a very ‘introductory’ meeting as several attendees told EURACTIV, was the question of funding.

German companies, like Wacker, and its industry association BDI are heavily lobbying to unleash industrial policy state-aid from the shackles of Brussels and the Competition Commissioner Margrethe Vestager, which they see as overly zealous.

During her annual State of the Union speech, Commission President Ursula von der Leyen floated the vague idea of a “Sovereignty Fund.” Commissioner Breton has since taken it on board, saying it should be financed by joint EU debt, much like the bloc’s response to COVID-19.

On Wednesday, the funding issue was apparently not high on the agenda, of which EURACTIV saw a provisional draft.

The Clean Tech Europe initiative has thus far refrained from addressing the question of funding. Whether that will be enough to match up against the IRA is unclear. 

Interaction with existing initiatives

The new platform is far from the EU’s first – Breton’s DG GROW has already set up a series of alliances and initiatives: November’s European Solar PV Industry Alliance, the 2020 European Clean Hydrogen Alliance and the 2017 European Battery Alliance, amongst others.

To avoid clashes, “actions identified under the Platform for specific technologies which already have a dedicated Alliance should be taken up in the Alliance”, the concept paper reads.

“The Platform would provide an overarching high-level framework for all clean energy industrial cooperation,” the document states.

[Edited by János Allenbach-Ammann/Nathalie Weatherald]

A leaked version of the Clean Tech Europe concept paper can be found below.