Abstract
This paper critically examines the concept of green industrial policy in the context of the European Union (EU) under the European Green Deal—an initiative aimed at achieving climate neutrality by 2050. While the European Green Deal emphasizes climate targets, it did not fully address the economic and social sustainability dimensions of the green transition. The EU, considering the growing concerns over the potential consequences of the United States Inflation Reduction Act (IRA) and China’s assertiveness in the value chains of clean technologies, reassessed its green industrial policy approach in the Net Zero Industry Act proposal. Considering these developments, this study delves into the historical evolution of European industrial policy, evaluates the current proposals presented by the European Commission, and puts forth principles and recommendations for a green industrial policy that can effectively facilitate the green transition within the EU.
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Notes
TRL (technology readiness level) classifies technologies by their stage of development. NZIA targets TRL 8 indicating technologies that have been tested and “flight qualified” and are ready for implementation into an existing technology.
An EU-level “Sovereignty Fund,” which might include clean-tech support, mentioned in speeches by Commission President Ursula von der Leyen in spring 2023, has not materialized. Instead, on 20 June, the Commission proposed a repackaging of existing EU funds under a so-called Strategic Technologies for Europe Platform (STEP), introducing a “sovereignty seal” as an “EU quality label for sovereignty projects” and a “sovereignty portal” for accessing funding opportunities under STEP. See European Commission press release of 20 June 2023, https://ec.europa.eu/commission/presscorner/detail/en/qanda_23_3347.
Of the €10 billion STEP fund, €3 billion is going to invest EU, €500 million to Horizon Europe, €5 billion to the Innovation Fund, and €1.5 billion to the European Defence Fund. Announcing STEP, Commission President Ursula von der Leyen said it would “set the stage” to mobilize funding across various EU programs, to reach up to €160 billion in investments “in the coming years,” as the “precursor to a fully-fledged Sovereignty Fund that would be created in the future.”
See “Support possibilities for schemes under Sect. 2.8 of the Temporary Crisis and Transition Framework: available at: https://competition-policy.ec.europa.eu/system/files/2023-03/overview_of_TCTF_section_2.8_schemes.pdf.
See press release, 5 May, 2023: https://www.bmwk.de/Redaktion/DE/Pressemitteilungen/2023/05/20230505-habeck-legt-arbeitspapier-zum-industriestrompreis-vor.html.
See press release, 11 May, 2023: https://www.elysee.fr/emmanuel-macron/2023/05/11/accelerer-notre-reindustrialisation-le-president-presente-sa-strategie.
The Advanced Research Projects Agency–Energy (ARPA-E) program, established shortly before the 2007-2008 financial crisis, has around USD 350 million of annual funding and aims, like its DARPA sister, to nurture new strategic energy technologies to achieve rapid deployment of radical technologies with high market potential.
See Council Regulation (EU) 2022/2577.
Such schemes already exist in EU countries, notably in Germany. See dossier, September 2022: https://www.bmwk.de/Redaktion/EN/Dossier/regulatory-sandboxes.html. EU countries endorsed regulatory sandboxes in November 2020. See proceedings, 16 November 2020: https://www.consilium.europa.eu/media/46822/st13026-en20.pdf.
Environmental criteria in public procurement should be handled carefully, as they might expose officials to lobbying and electioneering (for instance, in view of protecting local producers against competition; (Blanchard et al. 2022). But this risk could be mitigated by using precise and easy-to-verify award criteria (e.g., CO2 emissions of cars or carbon intensity of electricity) rather than imprecise and hard-to-verify criteria (e.g., environmental criteria related to the suppliers). This requires a clear categoriztion of green criteria, as well as adequate investment in the training of public authorities that must apply them (Sapir et al. 2022).
Under the Pact for Skills. See press release, 10 February 2023: https://news.industriall-europe.eu/Article/860.
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Veugelers, R., Tagliapietra, S. & Trasi, C. Green Industrial Policy in Europe: Past, Present, and Prospects. J Ind Compet Trade 24, 4 (2024). https://doi.org/10.1007/s10842-024-00418-5
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DOI: https://doi.org/10.1007/s10842-024-00418-5