STRASBOURG — The race to control tomorrow’s technology is on and Europe is desperately trying to catch up.
The European Parliament on Tuesday passed the Net-Zero Industry Act, a bill aimed at encouraging more technologies such as solar cells and wind turbines to be manufactured in the EU. Lawmakers hailed the result as a powerful signal of Europe’s intention to keep pace with global powers like the United States and China, both of which are investing money in green technology makers. Parliament also recently approved new legislation aimed at allowing Europe to exploit more of the minerals needed for these green technologies.
“It’s good news for the climate, it’s good news for the European economy and it’s a clear answer to the Americans,” Christian Ehler, a German MEP from the center European People’s Party, said Tuesday after the vote. -law that helped direct the negotiations. .
But the EU faces tough global competition and a late exit from the starting blocks. The United States has already approved $369 billion in incentives for climate-friendly investments and local manufacturing, while China has long sought to dominate green technologies through strong public support.
The EU is also trying to make an ideological shift in the process – moving from a defender of the global free market to a much-needed protectionist.
Europe must accept change, said French MEP Christophe Grudler, who led the negotiations for the centrist Renew group. And it can’t stop now.
“We are sending a signal,” Grudler told reporters before Tuesday’s vote, “but it is clear that the current funds are not enough.”
How does Europe intend to achieve this?
The Net Zero Emissions Industry Act sets a target of producing 40% of the EU’s clean technologies domestically by 2030. The legislation includes incentives to help the bloc reach its target, including a fast-track procedure authorization and easier access to financing for certain industries.
To inject more global ambition, lawmakers also added a target that the EU should produce 25% of all global clean technology by 2030.
This legislation forms a key pillar of the EU’s wider goal of achieving carbon neutrality by mid-century.
China dominates these efforts, however, as Europe still relies heavily on Beijing for everything from solar panels to lithium, a key ingredient in the green transition.
The legislation attempts to reverse this trend by effectively excluding Chinese companies from government contracts for technology deemed necessary for the EU to meet its climate goals.
Tsvetelina Penkova, a Bulgarian MEP who helped guide negotiations for the center-left Socialists & Democrats party, told POLITICO she would not describe the approach as “protectionist” but rather “progressive” and ” ambitious.”
“The reason,” she said, “is we want to make sure we’re actually talking about manufacturing capacity and production, not just assembling certain products.”
Speaking to Parliament on Monday, Internal Market Commissioner Thierry Breton reminded lawmakers of Europe’s disorderly rush to divorce another foreign supplier, Russia, after the latter invaded Ukraine.
The EU, he warned, cannot afford to become so dependent again.
“We can no longer replace energy dependence,” he proclaimed, “with technological dependence.”
It is not finished
Even though Parliament passed the bill on Tuesday, some countries were already calling for further adjustments as the legislature begins final negotiations with the European Commission and EU countries.
France wants EU-based companies to be given even greater priority in tenders for public contracts – a position it has repeatedly defended during negotiations.
Legislation passed by Parliament already directs governments to look beyond costs and consider other factors, such as how a contractor would contribute to the bloc’s green transition, and reduce reliance on foreign suppliers. This language is stronger than the Commission’s initial proposal.
France, however, estimates that these factors other than prices should have a weight of almost 50 percent in the decision-making process, compared to 30 percent currently.
“Ambition is essential if we want to guarantee that the aid provided to manufacturers setting up in Europe is not in vain,” wrote the French ministers of economy, energy and industry in a letter addressed to industry ministers at the start of the week and consulted by POLITICO.
Grudler, the French MEP, echoed this point on Tuesday in Strasbourg.
“This is the end of naivety in public tenders,” he said.
Show me the money
Agreeing to increase national production of wind turbines, heat pumps and solar panels is one thing, but devoting significant sums to it is another.
The EU initially considered taking on new debt to create a “sovereignty fund” to revive this manufacturing sector – in the same way it helped countries emerge from the economic doldrums caused by the pandemic. Instead, Brussels opted for a much weaker package, combining reallocated EU money with 10 billion euros in new funding from member countries.
Since then, the EU has taken additional steps, such as developing a plan to boost investment in hydrogen projects, seen as a key part of reducing carbon emissions.
But even collectively, the aid falls far short of the money the U.S. and China have shelled out.
Grudler estimates that the EU needs at least 80 to 90 billion euros if it is serious about realizing its ambitions. But given that the whole green transition is at stake, he argued, it is worth paying more to “buy European”.