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7th Jun 2020

Green Deal

EU unveils new industry plan, but is it green enough?

  • The commission estimates that removing the barriers of the single market and working closely with stakeholders could bring up to €713bn by the end of the decade (Photo: European Commission)

The European Commission has finally launched its updated EU industrial strategy, after long-standing requests by industry groups and political leaders calling for a stronger single market.

Tuesday's (10 March) proposals followed commission's new approach for the digital and green transition, as well as "the need for more inclusive working methods," said the commissioner for the digital portfolio, Margrethe Vestager.

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But the proposals failed to soften competition rules to boost so-called national "champions" - a key demand from Germany and France.

The commission plans to update how EU antitrust regulators assess industries in 2021 following an ongoing evaluation in a separate initiative.

But there was no mention on Tuesday of the 'national champions' idea, which covers cross-border mergers between national firms.

The commission, instead, wants to ensure an "equal level playing field" in the single market and address lack of reciprocity from abroad - pushing for European companies to gain access to public procurement in third countries, such as China.

The commission will also promised a white paper by mid-2020 and a new law in 2021 to address the effects caused by foreign subsidies in the single market and to tackle foreign access to EU public procurement and EU funding.

From sectors to ecosystem approach

While the single market is considered one of the biggest achievements of the European project, around 70 percent of businesses now thought that it was poorly integrated, said Vestager.

The commission estimated that removing barriers could bring in up to €713bn by the end of the decade.

These barriers included restrictive and complex national laws, excessive administrative procedures, and inadequate enforcement of EU rules.

The new industrial strategy also spoke of an "industrial ecosystem" approach that aimed to fully address the complex interrelationship between small and big companies, Vestager said.

Each of the "industrial ecosystems" will have access to digital platforms and a dedicated toolbox, as they will face different opportunities and challenges in the environmental and digital transformation areas - although a detailed plan will not be public until September.

However, according to Vestager, "one of the benefits that all ecosystems will share is fair competition - based on the EU's values".

Green Deal failure?

Meanwhile, emissions from heavy industry have not declined since 2012, making this sector a large contributor to climate change.

Industry accounts for about one-fifth of EU emissions, with the majority coming from the steel, cement, and plastics factories.

However, it takes up to 25 years to transform an industrial sector and all the related value chains and to be ready by 2050, "decisions and actions need to be taken in the next five years," the commission's Green Deal previously said.

"An industrial strategy that is fully aligned with the EU Green Deal needs to have industrial decarbonisation at its core," said the policy officer at NGO Carbon Market Watch, Agnese Ruggiero, who believes that Tuesday's proposal "failed" one of the first tests.

The new strategy also failed to set decarbonisation and technology deployment targets that could bring investment to industry.

Projects such as the EU Emissions Trading System can also be barriers to real industrial decarbonisation, Ruggiero addeed, urging the commission to swiftly put forward concrete measures "to clean up Europe's largest polluters".

The commission's proposal did mention support for cleaner technologies that can help to reach the 2050 climate-neutrality target.

But according to Johanna Lehne, policy advisor to NGO E3G, the lack of targets is "a significant gap" in the strategy as targets provided clarity on the pace and direction of travel.

"The commission is sending the right signals on the urgency to transform the industry, but it is delaying taking a stance on the most controversial elements of its industrial policy," she said.

"Without a landing zone, the strategy will feel incomplete," Lehne added.

The commission also proposed further legislation on innovation, investment, and skills.

A clean hydrogen alliance to accelerate the decarbonisation of industry will be launched in the summer, followed by alliances on low-carbon industries, and on industrial clouds.

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A new circular economy strategy was adopted on Wednesday intended to strengthen the EU's economy, empower consumers and protect the environment. However, it fails to set targets for the EU's so-called 'material footprint' and waste reduction for specific waste streams.

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