this is the new playing field on which a global race to develop manufacturing capacity – and therefore jobs, growth, and political influence – is taking place. In this new geopolitics of strategic supply chains, industrial policy is no longer a foul word.
As German Vice-Chancellor Robert Habeck recently said, speaking of the US Inflation Reduction Act, "if we don't keep up, they'll have them [the key industries] and we won't. That's the brutal reality".
That is a fair assessment. But it doesn't mean we should follow the US track of unrestricted subsidies. We need to organise ourselves the European way: relying on our own strengths and making the most of the single market.
The last few months have really shown a change in perspective in the EU. There is now a shared understanding that we cannot replace energy dependencies, particularly on Russian gas, with technological dependencies. That we must address existing strategic dependencies, such as on solar cells and modules. And prevent new ones from emerging: for electric cars, wind turbines or chemicals.
The Green Deal Industrial Plan is in motion
The Innovation Fund is a key EU funding instrument to bridge the cost gap between conventional and clean energy and industry, and for accelerating innovative net-zero manufacturing solutions in Europe.
We have just announced that 41 projects across the EU will receive grants for a total of 3,6 billion euros. Since its creation, the Innovation Fund has now supported projects in 21 Member States for a total of 6,3 billion euros.
For instance:
- Carbon capture and storage projects for the cement industry in Greece or Germany
- Industry electrification or hydrogen manufacturing projects in Spain or Portugal
- Clean tech manufacturing in Sweden, Denmark, Germany, Belgium or Spain
In fact, the selected projects under the Innovation Fund contribute up to 17% of the production capacity objectives set in the Net Zero Industry Act for solar, batteries and electrolysers. Creating quality jobs and growth here, in Europe. Europe's Green Deal Industrial Plan is firmly in motion.
A robust pipeline of projects
This call for projects – like the first two organised before it – was largely over-subscribed, showing a very solid pipeline of promising proposals across the EU. Often the result of the work of our European Industrial Alliances.
The Clean Hydrogen Alliance has a pipeline of more than 850 projects. And its spin-off, the Electrolyser Partnership, is helping to rapidly ramp up electrolyser manufacturing capacity, from 2,5 GW in 2022 towards an objective of 25 GW of annual electrolyser capacity by 2025. The same goes for the European Battery Alliance, which mobilises more than 160 companies around 180 projects. With concrete results already: more than 30 gigafactories under construction. And I am confident that the European Solar PV Alliance will also be able to deliver on investment projects along the entire supply chain.
A balanced basket of funding sources
That is why I have advocated for a basket of solutions, depending on Member States' circumstances, with coordination at EU level, to maintain a level playing field.
This starts with a better use of EU funds. The recovery and resilience plans, including their new REPowerEU chapters support clean tech manufacturing. We see investment support or reforms directly targeted at the net-zero industry in Spain, Croatia, Italy, Poland or Portugal. And support to decarbonisation of industry in Belgium, Germany, Greece, France, Hungary, Italy, Portugal or Slovenia. All in all, it is more than 12,5 billion euros that will be mobilised through RepowerEU to the benefits of European industry's decarbonisation efforts.
We are also strengthening our position through important projects of common European interest. With impressive results, such as the 20 billion euros of public and private money invested in the two IPCEI batteries, or the 26 billion euros in hydrogen.
Beyond that, we have also adjusted our state aid policies, through the temporary crisis and transition framework. With the possibility of supporting operational expenditure on certain strategic projects. And to match the subsidies that manufacturers might receive in third countries.
Last, but not least, we will continue to mobilise public investment banks. With some recent results worth highlighting. Such as the European Investment Bank's Board decision to broaden the scope of eligible sectors to boost financing for EU manufacturing in net-zero technologies and critical raw materials. In total, the additional funding is expected to mobilise more than €150 billion in investment, through an increase of EIB funding from 30 to 45 billion euros for REPowerEU projects.
The Net Zero Industry Act: the missing link
But there is no room for complacency: we need to speed up the work. Especially as our systemic partners and rivals are far from inactive on these issues.
We have proposed a real revolution: the introduction of manufacturing capacity objectives for 2030. 40% of our deployment needs for clean tech. 10% to 40% for raw materials, depending on the stage in the value chain.
And over and above these targets, we are providing the means to deliver on this emerging pipeline of projects. With a comprehensive perspective.
First, real measures to simplify administrative procedures. 5 years to obtain a permit is too much. We want to cut this time by more than half.
Second, we want to invest in human capital. A European Battery Academy has been launched, which currently covers 340,000 workers. And we are going to extend these Academies to all clean tech sectors. Including nuclear.
Third, support innovation. That is the role of the regulatory sandboxes : to push the innovation frontier and maintain European leadership.
And finally, adjusting access to market conditions to favour sustainability and resilience objectives without undermining deployment efforts.
Not a sprint, but a marathon
When it comes to supporting European industry, there is no time to lose. High energy costs, increased regulatory burden, an uncertain investment climate: there are many reasons why European industry may not be able to invest as fast and as much as needed.
The net-zero industry act will address these challenges and delivers even before being formally adopted. I know I can count on the European Parliament and Council's dedication to finalise the negotiations still this year.
But this race is not a sprint. Our global competitors have engaged into a marathon. That is why the financing question also requires a structural response. With the recovery programme coming to an end by 20206, with the temporary crisis and transition framework limited to 2025, the STEP platform proposed by the Commission should build a bridge towards a more permanent instrument in the next EU multiannual budget.
