The EU Green Deal Industrial Plan

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The European Commission, in its efforts to tackle climate change and to stay in the lead in achieving a net-zero economy, has recently presented the Green Deal Industrial Plan. The Plan was announced by President von der Leyen at the World Economic Forum in Davos in January 2023.

What is The Green Deal Industrial Plan?

In 2019 the Green Deal was introduced as a policy initiative in line with the Paris Agreement to reach the organisation's net zero by 2050 goal. The EU Green Deal covers not only the environmental, but also the social and economic aspects required to achieve a large-scale, multinational green transition.

Confirming the EU's intention to shift from an economy based on fossil fuels, to a sustainable and modern economy, and as a continuation of the Green Deal of 2019, the Green Deal Industrial Plan was established. The Plan focuses on the technological development and the advancement of the production and installation of the net-zero products. It also considers limiting the risks associated with phasing out the Russian fossil fuels, as this will automatically mean an acceleration of renewable technologies. The Plan aims to put the EU at the forefront in an ever-increasingly competitive global technology/manufacturing market place.

The Green Deal Industrial Plan is based on four pillars, summarised below:

A Predictable, Coherent and Simplified Regulatory Environment

Some of the Plan’s objectives focus on increasing the competitiveness in the global market. Therefore, the European Commission has introduced and additional 'competitiveness check' on new regulations to ensure that all impacts are addressed and obstacles are avoided.

As a priority, the Commission suggests to create a Net Zero Act in order to provide a simple regulatory framework for key technologies (batteries, heat pumps, solar PV etc).

Furthermore, the Commission plans to introduce ‘regulatory sandboxes’, with the purpose of allowing rapid experimentation of disruptive innovation and new technologies. The Commission will also propose a Critical Raw Materials Act, so that net-zero technologies are ensured to have required raw materials from diversified and sustainable sources.

The Plan touches on energy independency and the reformation of the electricity market. It also suggests the need for a significant renewable technologies scale-up and a transformation in industrial processes in order to boost commercial competitiveness.

The Commission aims to increase the transparency in the market by increasing the integrity of products' information and associated sustainability credentials.

Speeding Up Access to Finance

A total of €250 billion will be made available for green projects and the decarbonisation of industry. To achieve the timely development of the net zero plan, the EU will extend funding access to public and private institutions. To achieve these goals, the EU Commission proposes to adapt the national aid rules and to simplify the funding process for renewable technologies. Furthermore, on an EU level, the organisation will increase the fund by utilising the REPowerEU and Invest EU initiatives. The Plan also emphasises the role of private funding in accelerating the clean tech industry.

Enhancing Skills

The Plan recognises the importance of skills in the EU to achieve targets, particularly digital skills. The aim will be to scale up skilling and re-skilling of the workforce. To achieve the transition, the EU has developed a set of tools and initiatives allowing for the development and recognition of the qualifications, including the European Skills Agenda, the European Education Area, and the European Pact for Skills.

Trade and Resilient Supply Chains

The fourth pillar of the Green Deal Industrial Plan consists of global cooperation and making trade work for the clean transition. The EU recognises the importance of trade openness and cooperation to achieve stated climate neutrality targets. The EU will continue to work with the World Trade Organization to develop free trade agreements.

The Plan suggests the development of new instruments and initiatives to support the industrial transition, such as the Critical Raw Material Club and Clean Tech partnerships. The EU will further develop defence instruments and strategies against unfair trade practices.

The Future of European Industry

With leading pan-European strategies such as the Green Deal Industrial Plan and more large manufacturers seeking to decarbonise operations to meet commercial net zero targets, it is clear that industries across the EU are scheduled to make significant improvements to environmental performance in the coming years.

More: Energy Market Commentary, Decarbonization, European Green Deal, Net-Zero

Ahmad Saleh