On 1 February 2023, the European Commission (EC) unveiled the Green Deal Industrial Plan (GDIP) to promote Europe's net-zero industry and support a faster transition into climate neutrality in response to current global challenges.
The GDIP aligns industrial and trade strategy with European Union (EU) climate policy. Legal initiatives are being taken to create a simplified regulatory environment to facilitate the scaling up of the EU’s industrial capacity for net-zero technologies. The release of European and national public funds will be accelerated and increased to leverage private investment that support the deployment for net-zero technologies. Competition law will be changed to simplify state aid for green investments and make it more flexible. The GDIP also includes measures to improve digital and green skills to empower the workforce for the green transition. In terms of trade policy the GDIP includes securing the access to critical inputs for the clean transition, partnering with like-minded international countries and protecting the Single Market against unfair trade in clean technologies.
Measures under this plan that may be of interest to electrical wholesalers are those that support the use of renewable energy sources and net-zero technologies such as heat pumps, solar panels and batteries. Additional flexibility is given to Member States on state aid for zero-emission vehicles and energy efficiency in buildings. In addition, skills partnerships for onshore renewables, heat pumps and energy efficiency in cooperation with the ecosystem could be of interest as more state aid will be granted in a more flexible way for training activities of SMEs. Interest in the Commission's proposal to treat company training expenditure as an investment rather than a cost in the accounts needs to be examined.
The Green Deal Industrial Plan builds on existing European support mechanisms and consists of 4 pillars:
Predictable and simplified regulatory environment
Speeding-up access to finance
Enhancing skills
Open trade for resilient supply chains
1. A predictable and simplified regulatory environment
The EC will be proposing several legislative initiatives to simplify the regulatory framework and make it more predictable to allow the quick development of green industrial manufacturing.
A proposal for a Net-zero Industry Act is announced for mid-March 2023 to increase European manufacturing capacity of green technologies. It will establish a legal framework to facilitate rapid deployment of green technologies, ensure simplified and fast-track permitting, promote European strategic projects and develop standards to promote deployment of net-zero technologies across the Single Market. Industries that will fall under the scope of the new law include batteries, windmills, heat pumps, solar panels, electrolysers, carbon capture and storage technologies.
In addition, the EC will propose a Critical Raw Materials Act, identifying raw materials that essential for the manufacturing of net-zero technologies and ensuring sufficient access to those materials.
The EC proposes a reform of the electricity market design to decouple the electricity market from fossil fuels price peaks, promote the deployment of renewables and allow consumers to benefit from the lower costs of renewable energy.
The EC proposes to use harmonised sustainability and circularity requirements in public procurement which can help to create a more predictable demand for net-zero products and solutions.
As a priority, the EC will work on eco-design requirements on net-zero technologies.
2. Faster access to funding
The EC proposes to accelerate public investment and financing for clean tech production in Europe in order to unlock the huge amounts of private financing required for the green transition. To this end, the EC will facilitate disbursements under the existing funding mechanisms and revise competition policy with a view to the Green Deal.
The EC intends to make it easier for Member States to grant state aid to accelerate the transition to net-zero industry by amending the Temporary State Aid Crisis and Transition Framework. To this end, the EC is launching consultation with Member States on temporary flexibilities and adjustments to state aid rules that would allow aid until 2025 and would include:
simplification of aid for renewable energy deployment;
simplification of aid for decarbonising industrial processes;
enhanced investment support schemes for production of strategic net-zero technologies;
more targeted aid for major new production projects in strategic net-zero value chains.
The EC will further revise the General Block Exemption Regulation (GBER) by raising the notification thresholds for state aid for green investments. Together with a code of best practice to be endorsed by the EC and Member States this spring, this will simplify and streamline the roll-out of Important Projects of Common European Interests (IPCEI), in particular for innovative projects by SMEs. The revised GBER will give Member States more flexibility to support measures in key sectors for the transition to a net-zero economy, such as hydrogen, carbon capture and storage, zero-emission vehicles and energy performance of buildings. In particular, the EC intends to raise notification thresholds for support for green investments and increase the investment aid for recharging and refuelling infrastructures.
To avoid fragmentation of the Single Market due to different levels of national support, the EC will also increase EU funding for the green transition. In total, close to €270 billion will be available to Member States ) for measures under REPowerEU chapter of the Recovery and Resilience Fund (RRF), once it takes effect. The EC adopted a new guidance on the Recovery and Resilience Plans (RRP) explaining the process of modifying existing plans and modalities for preparing revised REPower EU chapters of the RRF. The guidance encourages Member States to take measures to support companies and increase their competitiveness through:
one stop shops for permitting of renewables and clean tech projects, to simplify and speed up the approval process for building and operating green tech projects.
tax incentives to support clean tech investment such as tax credits, accelerated depreciation, or subsidies linked to the acquisition or improvement of green investment assets.
Investment in reskilling the workforce for a green future, and in investing in the skills necessary for the industrial transition.
The Member States will have until 30 April 2023 to submit their revised RRPs.
For the medium term the Commission will propose the European Sovereignty Fund in the context of the review of the Multi-annual Financial Framework before summer 2023 to maintain a European edge on critical and emerging technologies.
3. Enhancing skills
The European Commission has adopted an initiative to make 2023 the European Year of Skills, during which developing the skills needed for the green and digital transformation will be a priority.
The EC will be working with Member States to set targets and indicators to monitor supply and demand in skills and jobs in the sectors relevant for the green transition, considering age and gender.
Amongst other measures, the Commission will propose to establish Net-zero Industry Academies in strategic industries to roll-out reskilling and up-skilling programs for achieving the net-zero goals, as well as an Academy for sustainable construction.
Furthermore, measures will be envisaged to support the alignment of public and private funding for skills development by exploring measures such as:
raising the ceiling for state aid for training for SMEs under the GBER.
treating company training expenditure as an investment rather than a cost in company accounts.
4. Open trade for resilient supply chains
The role of trade under the GDIP is to secure access to the critical raw materials for the green transition in cooperation with like-minded countries.
To achieve this, the EC will further develop the EU's network of Free Trade Agreements while ensuring effective implementation and enforcement of existing agreements.
In addition, the EC will explore raw materials partnerships with like minded partners to establish a ‘Critical Raw Materials Club’ bringing together raw materials consumers and resource rich countries to ensure global security of supply through a diversified and competitive industrial base. Further, it will explore CleanTech/Net-Zero Industrial Partnerships to promote the adoption of clean technologies globally.
As another trade policy under the GDIP, the EC will use its trade defence instruments, such as the Foreign Subsidies Regulation, to ensure that foreign countries’ subsidies do not distort competition on the Single market in the clean tech sector.
The GDIP has also been launched in response to the US Inflation Reduction Act (IRA) which provides subsidies for greening US domestic industry. The IRA, signed into law by President Joe Biden on 6.08.2022, provides US$ 369 billion in tax credits and other subsidies to companies that invest in low carbon technologies and to consumers who buy green products. To benefit of the subsidies, a significant proportion of materials and equipment must be produced in the US. An EU-US Task force on the IRA has been established to address concerns and coordinate support to the green transition.