EU must support clean technology if it wants to compete to U.S.'s IRA

Let the competition begin: EU must push clean technology to compete with the U.S.

The president of the European Commission stated on Friday that the European Union needed financial instruments to enable its clean technology to compete against American rivals. They already stand to earn from government assistance under the U.S. Inflation Reduction Act (IRA).

At a press conference in the northern Swedish town of Kiruna, Ursula von der Leyen refrained from asking for the issuance of new joint EU debt. She emphasized that 37% of the EU’s existing 800 billion euro recovery fund which is set aside for investments related to climate change.

EU nations praise the IRA

The majority of European nations applaud Washington’s commitment to the green transition, but they are concerned that the IRA would unjustly harm their industries because many of the subsidies only apply to goods made in North America, such as electric vehicles.

Although the Commission intends to relax the restrictions on state aid, certain EU nations have greater spending power. To maintain the single market, according to Von der Leyen, the block needs “serious and ambitious” financial tools.

According to her, such funding ought to be accessible in the short- and medium terms to enable a sufficient European response.

She stated that the Commission was working on a study of the requirements for the EU’s clean technology sector to compete with American competition.

EU must act fast to support clean technology

We need to act quickly because decisions about investments are being made right now, Von der Leyen said.

According to von der Leyen, Europe needs the industry for both the green transition and European countries’ prosperity, so the European Commission wants to keep it here and support it.

To address the economic effects of the Ukraine War and the Energy Price Crisis, France, Italy, and others have advocated for more Joint EU Borrowing. Still, Germany, the Netherlands, and Scandinavian nations prefer alternative approaches.

Olaf Scholz, the chancellor of Germany, has noted that just a small portion of the EU’s recovery money, which was borrowed jointly, is in use up today. He said that it has not even claimed some 200 billion euros. Before discussing any more joint borrowing, he advised using this money first.

However, a study from Scholz’s own Social Democrats on Thursday said that any fresh EU joint borrowing must undergo careful consideration first.

There is encouraging clean tech already

The European Union (EU) has been actively encouraging the development and adoption of clean technology to reduce its carbon footprint. Some of the other reason is the decrease in Europe’s dependence on fossil fuels. The EU has set ambitious targets for reducing greenhouse gas emissions, increasing the share of renewable energy in its energy mix, and improving energy efficiency.

One way the EU is promoting clean technology is through funding research and development of new technologies. The EU has invested billions of euros in research programs. The plan is for Europe to develop new and more efficient renewable energy sources. Some EU-supported research is about the technologies for reducing carbon emissions from transportation and industry.

The EU is also implementing policies and regulations to encourage the uptake of clean technology by businesses and individuals. For example, the EU has set energy efficiency and renewable energy targets for each member state and has implemented a carbon trading system to incentivize the reduction of carbon emissions.

In addition, the EU is working to remove barriers to the deployment of clean technology, such as through the development of a single market for energy, which will make it easier for companies to invest in clean energy projects and sell their clean electricity to customers in other member states.