The Green Deal industrial plan to revitalize European industry

Stimulating and protecting Europe’s net zero emissions industry

On February 1, 2023, the European Commission launched the “GreenDeal Industrial Plan for the era of net zero emissions”. In May 2024, the European Council adopted theNet Zero Industry Act (NZIA), a regulation to this effect. 19 “net zero” technologies were selected, including batteries, wind turbines, heat pumps, photovoltaic equipment, electrolysers, nuclear power and CCUS technologies.

By adopting an industrial plan, the EU aims to stimulate its clean-tech industry. Another aim is to protect it from the unfair practices of its trading partners, particularly China. The Green Deal industrial plan is based on four pillars.

Pillar 1 of the Green Deal: A predictable, consistent and simplified regulatory environment

The second section focuses on the critical raw materials needed to manufacture equipment. 34 have been identified: cobalt, copper, lithium, nickel, tungsten… Today, Europe is highly dependent on external supplies (100% of heavy rare earths are supplied by China, 71% of platinum by South Africa…). In March 2024, the European regulation on raw materials was adopted. It aims to achieve several objectives by 2030:

• At least 10% of the EU’s annual consumption of critical raw materials must be extracted within the Union.
• At least 40% of the EU’s annual consumption must come from processing in the EU (refining, treatment, etc.).
• At least 25% of annual consumption must come from domestic recycling.
• For each strategic raw material, no more than 65% of the EU’s annual consumption should come from a single third country.

Demand for raw materials in the European Union

(high demand scenario), in millions of tonnes per year

Finally, reform of the European electricity markets is the third major component.

Pillar 2 of the Green Deal: Accelerating access to financing

Numerous programs already exist to finance the transition to a carbon-neutral economy. The 27 national recovery and resilience plans, for example, have earmarked 250 billion euros to finance green measures. The Horizon Europe program, for its part, is endowed with 40 billion euros for research and innovation as part of the Green Deal. As a final example, the EU’s cohesion policy has earmarked €100 billion for the ecological transition. To date, the funds available have been used primarily for research, innovation and the deployment of renewable energies. The aim now is to broaden and facilitate access to financing for the net-zero-emission industry.

National aids are at the heart of European strategy. The Commission is seeking greater flexibility in the granting of State aid. Several levers have been identified, in particular the simplification of aid for the decarbonization of industrial processes through more flexible aid ceilings per beneficiary, or the possibility of granting aid on the basis of a standard percentage of investment costs. Better targeting of aid towards new projects in the value chains of zero-emission industry is also planned. Lastly, Member States will have greater latitude over the amounts of aid granted to certain key sectors, such as carbon capture and storage, zero-emission vehicles, recharging infrastructure and hydrogen.

EU funding will continue to be used. In fact, it will be increased . To facilitate access, a “Strategic Technologies for Europe Platform” (STEP) is currently being set up. The idea is to redirect funding from existing funds (InvestEU, Innovation Fund, Horizon Europe, Cohesion Fund, etc.) into three main strategic areas:

• Disruptive innovations such as microelectronics, quantum computing and artificial intelligence.
• Renewable technologies (electricity storage, alternative fuels, CO₂ capture, hydrogen…).
• Biotechnologies and bioproduction, such as biomolecules and medical technologies.

A “sovereignty label” will be awarded to projects contributing to these objectives, to make it easier for their promoters to attract public and private funding.

The final area concerns private finance. Here, the EU acts as a facilitator, with the ambition of stepping up its efforts to create a more efficient capital markets union. According to the Commission, a single capital market would enable companies to raise funds more easily, while being less dependent on bank financing.

Pillar 3 of the Green Deal: Improving skills

Developing green and digital skills is the third pillar of the Green Deal industrial plan. The Commission intends to carry out a number of actions at the same time, including :

Pillar 4 of the Green Deal: Resilient trade and supply chains

The development of trade with partners outside the EU is a key element of the EU’s strategy under the Green Deal industrial plan. With this in mind, the EU will continue to promote international cooperation through the World Trade Organization (WTO) and free trade agreements. New initiatives will also be deployed: the creation of a critical raw materials club to guarantee secure and sustainable global supplies, the development of industrial partnerships and the implementation of an export credit strategy.