The European Union announced plans for its own “Green Deal” on Wednesday in response to the enormous green subsidy program implemented by the Biden administration.
The European Commission said in a statement that the Green Deal Industrial Plan will “enhance the competitiveness of Europe’s net-zero industry” by simplifying regulation, speeding up access to finance, improving skills, and building “resilient” supply chains through new trade deals.
The proposals, which will be discussed by leaders of the EU next week, would make $272 billion, or €250 million, available from existing EU funds for the greening of industry. They would also provide tax breaks to businesses that invest in net-zero technologies.
Ursula von der Leyen, president of the European Commission, stated to reporters on Wednesday that the package of measures will guarantee a “level playing field” worldwide. She added, “Europe is determined to lead the clean technology revolution.”
In response to the US government’s flagship climate legislation, the Inflation Reduction Act, which will channel $369 billion toward projects utilizing clean energy, Von der Leyen and other EU leaders have emphasized the necessity of implementing a bold investment package for green projects.
The leaders of the EU are concerned that the $270 billion in tax breaks offered to American businesses will disadvantage European businesses and encourage them to relocate to the United States.
At the World Economic Forum in Davos last month, a number of EU officials criticized the Inflation Reduction Act, raising the possibility of a subsidy war.
The EU commissioner for trade, Valdis Dombrovskis, stated in a panel discussion that while the largest climate investment in US history was commendable, Europe’s “concern is that it is done in a discriminatory way.”
“It’s not helping to build transatlantic value chains on the green transition, but rather actually severing those value chains,” he added.
The European Commission also pointed the finger at China in a document outlining its new green industry plan, stating that China has provided green subsidies that are twice as high as those in the European Union in relation to GDP. It added that more must be done by Europe and its partners to combat the effects of such unfair subsidies and prolonged market distortion.
The EU’s green plan calls for loosing regulations on state aid so that member states could match aid from a third country for initial investments in “targeted” industries that are relevant to the net-zero transition.
It also includes a European Sovereignty Fund to ensure that Europe has an advantage over “critical and emerging technologies” like artificial intelligence and microelectronics.
The Critical Raw Materials Act, which aims to secure the EU supply of rare earth minerals essential to developing net-zero technologies, and the Net Zero Industry Act, which would speed up the issuance of permits for green projects, are also included in the plan.