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Before release of draft plan, experts warn against zero-sum mentality
The European Commission is to unveil the industrial plan underpinning its Green Deal on Wednesday, but experts warn against a zero-sum mentality in a race that might harm global efforts to counter climate change.
A draft document of "A Green Deal Industrial Plan for the Net-Zero Age" leaked to the press on Monday described the European Union's plan as based on four pillars: a predictable and simplified regulatory environment; faster access to sufficient funding; skills; and open trade for resilient supply chains.
While the plan names China, the United States and some other countries for their subsidy policies, its words on China are harsher.
The draft plan says that the Chinese subsidies have long been twice as high as those in the EU, relative to gross domestic product, with a pipeline of $280 billion of investment, distorting the market and ensuring China's lead in a number of technologies.
"Europe and its partners must do more to combat the effect of these unfair subsidies and prolonged market distortion," it says.
The draft plan, which might still be changed before Wednesday's announcement, is designed to outline how Europe can keep its place as a manufacturing hub for green products such as electrical vehicles and respond to massive subsidy programs in China and the US.
It will come ahead of an EU summit in Brussels on Feb 9-10.
The commission will make use of a foreign subsidies regulation that took effect this month to investigate if subsidies granted by third countries impact the EU's internal market, according to the plan.
"The EU will also work with partners to identify and address distortive subsidies or unfair trading practices relating to IP theft or forced technology transfer in non-market economies," the draft plan says.
The EU also plans to strike back at the $369-billion US Inflation Reduction Act, or IRA, by easing restrictions to allow tax credits for green investment.
European Commissioner for Competition Margrethe Vestager acknowledged in the plan that COVID recovery funds could be redirected under the proposed loosening of state-aid rules.
There is widespread concern in Europe that the IRA will lure EU companies away to the US by taking advantage of the US subsidies.