Brussels sets out to revitalise European industry with cheap and clean energy

The European Commission has decided that reviving EU competitiveness requires revitalising industry . But this has a problem: Europe has much more expensive energy than the United States or China; and it is also embarking on ambitious decarbonisation objectives for its economy. In short, a major challenge that requires a very complicated balance in the current and uncertain global geopolitical scenario. To advance along this path, the new European Executive has hit the ground running by presenting, 88 days after taking office, as Vice President Teresa Ribera recalled, three important initiatives: the Pact for a clean industry, the Plan for affordable energy and a programme to reduce the bureaucracy faced by companies. Among all the measures included in these plans, the creation of a bank to finance industrial decarbonisation with some 100,000 million stands out.

“There is no economic resilience without a robust industrial component,” reads the first paragraph of the Pact for a clean industry released on Wednesday . “The world is changing fast and we must do so too. Our prosperity and security depend on it. Our idea is for Europe to be a leader in clean energy industry,” said Vice-President Ribera, who together with four other members of the College of Commissioners (Frenchman Stéphane Séjourné, Danish Dan Jorgensen, Dutchman Wopke Hoekstra and Latvian Valdis Dombrovskis) have led the drafting of the communications and directives launched.

The plan to revitalise industry begins with energy , a key element in the fight against climate change, the latter being a fundamental banner in the EU during the previous legislature. Making it cheaper has become a central element so that the battle to contain global warming does not cost citizens money and, above all, jobs. In short, it is about ensuring that a laudable objective does not encounter strong social opposition due to undesirable consequences.

So the Commission has put special emphasis on energy. It is the first point of the Pact for a clean industry and it also involves an accompanying development. It is about achieving a reduction in gas prices, the fossil fuel that would play a leading role until the use of cleaner energy sources is advanced. They are now at their highest level for two years. It is also about making electricity cheaper.

One of the ways that the Commission proposes to achieve these objectives is to create a trans-European transport network (gas pipelines, hydro pipelines and high-voltage power lines) within the energy union. This would involve moving forward with interconnection so that a single energy market can be achieved once and for all. The proposal is not new and its development has been slow so far. Why should this time be different? “We have no other option,” responds Jorgensen, the Energy Commissioner. The Commission also advocates fiscal incentives, tax reductions and the elimination of surcharges on electricity bills that are not directly linked to the generation and transport of this energy. Another point is “ensuring the proper functioning of the gas market,” a way of saying that it is not performing ideally now and that part of the price increase is due to speculation, and to do so it proposes strengthening the power of the various regulators.

The following lines of action in the industrial plan include training the workforce, developing trade and collaboration agreements, promoting the circular economy, prioritising made-in-Europe products in public procurement and seeking instruments to boost business investment. One of these would be the creation of the Industrial Decarbonisation Bank, which would have 100 billion euros between contributions from States (voluntary contributions of up to 30 billion euros), items from the current European budget (45 billion euros) and future income generated by carbon emission rights (25 billion euros).

Brussels also plans to facilitate state aid to boost private investment. The aim, explained Ribera, is to “facilitate an environment favourable to investment with a framework of aid that will simplify and speed up support for renewable energies, decarbonisation and the manufacture of clean technology products”.

The industrial plan is complemented by the first omnibus package of administrative simplification, focused on environmental standards and obligations . Because in the European capital, the business discourse has taken hold that companies bear a lot of bureaucratic burden and that this hinders competitiveness. In this field, which has raised many misgivings due to the risk of deregulation that it entails, the Commission proposes to substantially reduce obligations in this area, postpone the entry into force, less surveillance by other actors such as unions and NGOs, and less severe sanctions for non-compliance, according to the Brussels plans that must now be discussed by the co-legislators, the European Parliament and the States.

The Social Democrats, who had already expressed fears that the proposals would undermine the ambitious environmental objectives already agreed, have promised to look closely at the proposals. “The omnibus package can be improved and we will fight in Parliament for the integrity of the climate proposals,” said Socialist MEP Nicolás González Casares, who was very involved in energy legislation in the last legislature. Casares also praised the Affordable Energy Plan as a step forward, but warned that “it needs more specificity and more ambitious measures to address the price crisis.”

In exchange, the cuts – a snip but not a “chainsaw”, stressed the Vice-President for Industrial Strategy, Stéphane Séjourné – have been substantially halted in another key law, the green taxonomy . This is the classification that establishes which investments can really be considered as contributing to the fight against climate change. Although the number of companies obliged to follow it when preparing their sustainability reports has been greatly reduced (all those with fewer than a thousand employees and a turnover of up to 50 million euros will be exempt, although initially it was 450 million euros), Brussels has decided not to try to reopen the taxonomy law .

“Our commitment to ensuring the green and digital transition remains unchanged, but we have to recognise that this has had a cost, creating a huge regulatory burden on people and businesses,” said the Commissioner for the Economy, Valdis Dombrovskis. Brussels estimates that the measures presented on Wednesday, which also seek to “simplify and optimise” some European investment programmes, will allow for annual savings in administrative costs of at least 6.3 billion euros.

The proposal also proposes exempting small importers, mainly SMEs and individuals, who are not the biggest polluters anyway, from the obligations of the Carbon Border Adjustment Mechanism (known by the acronym CBAM). Brussels proposes a new annual cumulative threshold of 50 tonnes per importer, and says that this will eliminate CBAM obligations for 182,000 importers, or 90% of the total. Nevertheless, the Commission says, 99% of carbon emissions will still be covered, since these are mainly responsible for large companies that are still subject to the measure.