BRUSSELS, March 16 (AP) – The European Union on Thursday proposed plans to fundamentally overhaul its policies to promote green technology and handle critical raw materials, imposing restrictions on imports from countries such as China while unleashing subsidies and other fiscal incentives to increase domestic production.
The plan by the European Commission, the EU’s executive arm, is crucial to achieving a climate-neutral economy, while also boosting the bloc’s strategic independence in a world of changing geopolitical alliances.
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To achieve its clean technology and strategic goals, the EU is making a major economic shift away from decades of preaching the gospel of a free-market economy, where any investment in public policy is considered intervention, reminiscent of bygone era. Now, the plans again call for state aid, mentorship and financial incentives as key elements of a transition from fossil fuels to a green economy.
“I think one of the mistakes we made — and a mistake with old-fashioned industry politics — is that there is no industry politics. That’s what we’ve thought in Europe for a long time, that the market will sort itself out,” said European Commission Vice President Fran Frans Timmermans said.
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And looking at China’s state-owned economy, he said Beijing is leading in green and clean technologies that will dominate the global economy. Now, 98% of rare earth materials and 93% of magnesium in the EU come from China. “We now understand that the strategic choices China made ten years ago are now playing out. We must now make our own strategic decisions for the next few decades.”
Key to the proposal is a commitment to produce at least 40% of needed clean technologies in the G27 by 2030, while ensuring that no more than 65% of any strategic raw material consumption comes from a single third country – often China in practice.
On top of that, the plan expects financial incentives from member states to be more popular and approved faster. “It’s not old-fashioned. When you’re in the middle of an industrial revolution, that’s what you need to do.”
Standing next to Timmermans, EU Internal Market Commissioner Thierry Breton could only say: “Music to my ears.”
The EU’s move also follows the passage of a $375 billion U.S. inflation-reduction bill last summer, when President Joe Biden pushed through an incentive-laden and America-first clean energy law. After months of fierce protests over measures to keep EU products out, the EU accepted a ceasefire, and plans for a net-zero industry law and a critical raw materials law on Thursday emphasized that it was better to join similar schemes than to be rejected. It beats better.
“I totally disagree with the fact that we lost the subsidy race,” Breton said. “That’s why I say we’re moving … I believe that’s what we’re doing today.” The plan still needs to be approved by the EU’s 27 member states and parliament, a process that will take months. Maybe even more than a year.
The stakes are huge. The European Union estimates that the global cleantech market will be worth €600 billion per year by the end of the century. In addition, the deployment of renewable energy will quadruple by 2050, the use of heat pumps will increase six-fold by 2050, and the production of electric vehicles will increase 15-fold.
Since state aid and many incentives come from member states themselves, the EU has to go through light regulations to approve them, so the plans do not give accurate overall estimates.
The stakes are equally huge on a geopolitical level, which is where the Critical Raw Materials Act comes in. Collectively, these materials are used in everything from solar panels to heat pumps and electric vehicles.
With incentives in place, the European Commission wants at least 10% of consumption of strategic raw materials to be mined locally and at least 40% processed locally by the end of the decade.
While seeking to wean itself off China by setting import quotas, the EU is seeking to forge a select alliance of key raw materials with countries such as the United States and Canada to further entrench the Western bloc in an increasingly unstable global environment.
“We are strengthening our cooperation with reliable trading partners around the world to reduce the EU’s current dependence on one or a few countries,” European Commission President Ursula von der Leyen said. (Associated Press)
(This is an unedited and auto-generated story from a Syndicated News feed, the content body may not have been modified or edited by LatestLY staff)