4th Dec 2023

EU unveils green industrial plan to counter US and Chinese competition

  • EU Commission president Ursula von der Leyen speaking in Davos (Photo: World Economic Forum)
Listen to article

European Commission president Ursula von der Leyen announced on Tuesday (17 January) a plan to boost subsidies and tax breaks for clean-tech companies in the face of US and Chinese competition.

"China has been openly encouraging energy-intensive companies in Europe and elsewhere to relocate all or part of their production," she said, speaking at the World Economic Forum in Davos, Switzerland. "To get ahead of our competition, we need to make Europe more investment friendly."

Read and decide

Join EUobserver today

Become an expert on Europe

Get instant access to all articles — and 20 years of archives. 14-day free trial.

... or subscribe as a group

The EU intends to respond "more robustly" and to that end has proposed a new 'Net-Zero Industry Act,' inspired by the EU's chips act last year, which will fasttrack clean-tech production sites and increase funding for strategic sectors.

The International Energy Agency estimates the clean-tech sector will be worth €600bn annually in 2030, and von der Leyen said the EU only has a "small window" to invest and stake its claim before the "fossil-fuel economy becomes obsolete."

The European push for clean tech is primarily a response to the US Inflation Reduction Act approved by congress in the summer, which directs about $369bn [€340bn] to clean energy and energy-security programmes.

The EU itself does not have the same financial firepower and needs to negotiate with member states on how to relax the bloc's state-aid rules best.

These rules are meant to prevent unfair competition within Europe as Germany could outspend all other countries, wiping away their industries.

To protect against so-called "fragmentation," von der Leyen reiterated her determination to propose a new European fund financed by fresh EU borrowing, backed by all the member states.

The proposal is due in the summer, but it is still being determined whether a majority of member states support it. Germany, the Nordic countries and the Netherlands traditionally oppose new EU debt, preferring to use existing European funds first.

But this argument may not convince others this time, as state-aid rules have already been relaxed in response to the energy crisis (and the pandemic before that), which has benefitted Germany especially.

In 2022, Brussels approved 170 national emergency state aid applications, which accounted for €540bn. Over 50 percent was allocated to Germany, under 30 percent to France. Only four percent went to Italy, which has the second-highest industrial output in Europe, far outstripping France.

"[A sovereignty fund] is essential if we want to strengthen our competitiveness without undermining our internal market and its level playing field," Italian commissioner for economy Paolo Gentiloni said. "It's not about a subsidies war with other countries or the US. It's about the strengthening of European competitiveness."


Von der Leyen made her announcement against the background of ongoing efforts by EU negotiators to convince their US counterparts to extend some subsidies and tax breaks to EU companies—especially electric vehicles. Von der Leyen also called on the US to set "fair" incentives so "we can jointly benefit."

But trade commissioner Valdis Dombrovkis, who is leading the negotiations, said the EU "has to be realistic" about the US adapting its policy to EU wishes.

Speaking ahead of his meeting with US trade representative Katherine Tai in Brussels on Tuesday, he said, "not all our problems with the Inflation Reduction Act will be solved, so we still need to see what the European policy response should be."


Squeezing wages is not the answer to inflation

The inflationary "threat" is a favourite bogeyman of conservative and neoliberal economists. For them it's a question of defending savers and wealth and preparing the ground for austerity policies. This vision fails to identify the actual reasons behind price rises.


Dubai's COP28 — a view from the ground

Discussion of the biggest existential threat humanity has ever faced is barely mentioned on billboards or signage in Dubai — yet visitors are made aware quite quickly that t world rugby sevens tournament is imminent.

Latest News

  1. EU-China summit and migration files in focus This WEEK
  2. COP28 debates climate finance amid inflated accounting ‘mess’
  3. Why EU's €18m for Israel undermines peace
  4. Israel's EU ambassador: 'No clean way to do this operation'
  5. Brussels denies having no 'concern' on Spain's amnesty law
  6. Dubai's COP28 — a view from the ground
  7. Germany moves to criminalise NGO search-and-rescue missions
  8. Israel recalls ambassador to Spain in new diplomatic spat

Stakeholders' Highlights

  1. Nordic Council of MinistersArtist Jessie Kleemann at Nordic pavilion during UN climate summit COP28
  2. Nordic Council of MinistersCOP28: Gathering Nordic and global experts to put food and health on the agenda
  3. Friedrich Naumann FoundationPoems of Liberty – Call for Submission “Human Rights in Inhume War”: 250€ honorary fee for selected poems
  4. World BankWorld Bank report: How to create a future where the rewards of technology benefit all levels of society?
  5. Georgia Ministry of Foreign AffairsThis autumn Europalia arts festival is all about GEORGIA!
  6. UNOPSFostering health system resilience in fragile and conflict-affected countries

Stakeholders' Highlights

  1. European Citizen's InitiativeThe European Commission launches the ‘ImagineEU’ competition for secondary school students in the EU.
  2. Nordic Council of MinistersThe Nordic Region is stepping up its efforts to reduce food waste
  3. UNOPSUNOPS begins works under EU-funded project to repair schools in Ukraine
  4. Georgia Ministry of Foreign AffairsGeorgia effectively prevents sanctions evasion against Russia – confirm EU, UK, USA
  5. Nordic Council of MinistersGlobal interest in the new Nordic Nutrition Recommendations – here are the speakers for the launch
  6. Nordic Council of Ministers20 June: Launch of the new Nordic Nutrition Recommendations

Join EUobserver

Support quality EU news

Join us