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Thierry Breton, the European Commission’s industry chief, is combining EU capital with a plan to stop European industry from being wiped out by US rivals who are set to benefit from a bumper package of subsidies.
Breton’s Clean Tech Act is part of his direct response to America anti-inflation law, a $369 billion package that seeks to revive American companies by helping them switch to a greener model. Europe Inc. To prevent the U.S. from falling under US influence, Breton is presenting the Clean Tech Act as a way to channel money from European states into its corporate champions of the 27-nation bloc.
Breton’s thinking already meshes perfectly with that of his home country – France. has announced comprehensive measures To shore up domestic green industries. Knowing that more traditionally free-trading nations such as the Nordics are skeptical of such state intervention, Breton launches a charm offensive to garner widespread European support.
wednesday onwards Discussing Europe’s competitiveness among the 27 European Commissioners, the French Commissioner met with Spanish Prime Minister Pedro Sánchez, Belgian Prime Minister Alexandre de Crew and Polish Prime Minister Mateusz Morawiecki.
Breton is deliberately attracting capital from the EU, whose economies have heavily industrial bases and are keen to prevent their countries from turning into manufacturing wastelands due to high energy prices and Washington’s green subsidy package, which diverts investment towards the US. Let’s take the risk of relocating.
European Commission President Ursula von der Leyen is set to reveal more details about European plans at the World Economic Forum in Davos next week, two officials briefed on her plans said. Part of the discussion within the European Commission on Wednesday will be how far those plans align with Breton’s.
Speaking to Politico on Tuesday, just back from a meeting with Sanchez in Madrid, Breton said he was “very happy to see that we share the same analysis, but also the same conclusion, which means that We agree that there needs to be a joint and coordinated response at EU level, which Pedro Sánchez strongly emphasized.”
protect the single market
Breton said he had emphasized two key points in his meeting with Sánchez and other EU leaders: first, “the need for a coordinated response with both horizontal legislation responding to the IRA”. [Inflation Reduction Act]a bit like we did with the CHIPS Act – but this time for a European IRA, that is [European Council President] Charles Michel and the leaders of the European Union have asked us to do so.”
“And second, on financing, we need to ensure that there is a level playing field in terms of equal access to funds for all EU countries to subsidize key industries in Europe, especially green supply chains” .
It is an attempt to address one of the smaller countries’ major concerns: namely, that subsidies could tear apart the bloc’s sacred single market. The danger is that EU moves to allow more subsidies will unfairly allow rich countries such as France and Germany to support their companies in a way that countries such as Portugal or Greece will never see again amid long-running tensions. And will not be able to revive the crack.
Breton’s pitch risks attract the disdain of EU competition chief Margrethe Vestager, who has taken a largely cautious approach to Europe’s green industries. just before the christmas break, den warning that “you can’t build competitiveness with subsidies” and that Europe should aim to preserve its single market, which it described as its “most precious asset”.
Vestager has traditionally been the liberal counterpoint to restrain Breton’s more aggressive interventionist tendencies within the commission. But recently she has been less vocal in opposing the subsidy. Still, the Danish commissioner thinks the momentum is with Breton, as he has the support of Paris and at least a part of the German government – and is rallying a growing number of EU capitals.
Breton argued that the EU leaders he spoke to agreed on the need to act quickly and that he did not need convincing – contrary to some inside the Commission. “In my recent discussions – be it with the Polish Prime Minister, the Belgian Prime Minister, the French Prime Minister and President, and today with the Spanish Prime Minister – there was really a consensus that we absolutely need a swift and coordinated response. is something that I will now also discuss with my colleagues in the Commission,” Breton said.
EU leaders, Breton said, “They all agreed on the need to act quickly. To be even more honest, everyone complained that the response was too slow,” he said, referring to the EU’s joint industry projects. Citing what are known as important projects. Common European Interest, “where we sometimes take up to two years, so we lose. What really needs to be done is to accelerate and allow these processes.”
fuzzy funding
a big part of what Breton is Call A European Inflation Mitigation Act is already in the works, as is making EU state-aid rules more flexible in order to pump more government money into struggling industries. The commission plans to adopt its revised state aid framework later in January.
It comes after Brussels eased emergency state aid rules in response to Europe’s economic crisis brought on by both the coronavirus pandemic and then the war in Ukraine. This prompted an EU diplomat under pressure to compare how flexible EU state aid rules can be to a gymnast.
In 2022, Brussels approved 170 national applications for emergency state aid worth around €540.2 billion. The lion’s share of these billions was distributed to Germany – which accounts for almost half of all state aid approvals – and France, which accounts for less than 30 percent.
Lars Danielsson, the Swedish ambassador to the European Union, told POLITICO there is an “openness” to temporary measures, but warned “some of us believe we should always be very careful” with state aid so as not to interfere with the market. can be avoided. Danielsson said whether EU countries can reach a consensus on revised state aid rules will depend on what the Commission’s proposal looks like.
Breton’s call for a so-called Clean Tech Act is based on a “Clean Tech Europe” platform set to strengthen the clean energy sector alongside the EU’s Chips Act and Raw Materials Act.
But an EU diplomat told Breton of the meetings that much is still in the conceptual stage, with no concrete proposals on paper.
Any next steps, such as the much-anticipated European Sovereign Fund, mentioned earlier Ursula von der Leyen’s State of the Union address in September, not expected before the summer.
Danielson said Brussels needed to first properly assess the impact of the US law before jumping to conclusions.
A European Commission official warned that the mentioned sovereign fund is “a good idea”, but “we don’t have the money for it.” Due to the closed EU budget, the fund may have to rely on some subsidies as a start, to lure private investment later. “Still, you have to put [some] Money in it
Breton, backed by Economy Commissioner Paolo Gentiloni, is pushing for funding beyond existing funds such as RePowerEU, a plan to reduce dependence on Russian fossil fuels. But the new European funding is a very contentious issue in Brussels, with several EU countries including the Netherlands and Germany against issuing new EU money.
Peter Hack and Nicholas Winokur contributed reporting.