EU to back Clean Industrial Deal with 100b euros

The European Commission has announced on Wednesday that it would mark 100 billion euros to help the European Union (EU) member-states to move to clean renewable energy sources and reach the 2050 Net Zero target.

European Commission President Ursula von der Leyen admitted in a statement the hurdles on the way: “The demand for clean products has slowed down, and some investments have moved to other regions. We know that too many obstacles stand in the way of our European companies, from high energy prices to excessive regulatory burden. The Clean Industrial Deal is to cut the ties that still hold our companies back and make a clear business case for Europe.”

The EU executive wants to achieve this through a phased programme through 2025 and 2026. The general outline is that European industries should decarbonise by opting for electricity as the chief energy source and move away from excessive dependency on fossil fuels.

The industrial decarbonisation is to be achieved through electricity, which in turn is produced from natural gas. The idea is to shift from fossil fuels to natural gas, and at the same time pursue vigorously green hydrogen as a renewable energy base, and also the nuclear energy option. The European Commission wants to create an enabling ecosystem to achieve this through tax incentives, through subsidies, through favourable power purchase agreements (PPAs) across the EU. And it also wants to fine-tune the emissions trade framework. At the moment, the plan lacks hard details, and it looks more a theoretical model. But what is likely to work in its favour is that once it promotes clean manufacture products in the market, and creates demand for them, it will be able to create a business cycle of manufacture, market, and consumption cycle.

And Europe feels it can do it because it is the hub of manufacturing, that it has the base, the skills and technology from where it can move forward. It is easier for Europe to create the innovative technologies to come into play. It is a reasonable expectation. This would mean that it may have to take a tough stance on American exports under a Trump regime which is throwing away any means of making the energy transition to green sources, nuclear energy et al. And the plan goes further, discussing the circular economy system, to make maximum use of reducing waste and recycling. The European Commission is also aware that it has to maintain its competitive edge with two other major economies, that of the United States and China.

What is clear however is the determination of the policymakers in Europe to press forward with the green agenda and the desire to combat the climate challenge seriously even as the United States under President Donald Trump is reneging on commitment to meet the climate change challenge.

If EU succeeds in decarbonising its manufacturing, then it will serve as a model for the rest of the world. The European Commission is making the persuasive argument that it is profitable to make the green energy transition because the future will force everyone to move away from fossil fuels because of the imminent climate changes. And there is also political consensus across the board from conservatives to socialists to the environmentalists that there is a need to change the base of manufacturing away from fossil fuels.

Ursula von der Leyen is a political conservative but she is fully committed to decarbonising industrial production in Europe. European political conservatives and centrists are not climate change deniers as the Republicans are in the United States. Europe hopes to be at the helm of economic changes with its green energy project.