Clean Industrial Deal

The EU's idea of initiating green growth through decarbonization pressure is in danger of failing: High energy costs, low domestic production capacities for green technologies and tough global competition call for a rethink. In its Communication on a Clean Industrial Deal, the EU Commission has therefore outlined a comprehensive package of measures to strengthen the competitiveness of industry on the path to climate neutrality.

The authors Andre Wolf and Götz Reichert are particularly critical of the planned introduction of local content criteria in public procurement: "This is the wrong way to strengthen the resilience of industrial supply chains. The EU should focus more on establishing new international supply channels with like-minded partner countries," says cep economist Wolf. New CO₂ labels and green lead markets could help to drive the development of decarbonization technologies, improve the overall economic efficiency of the transformation and thus reduce emission abatement costs. However, they also threaten to make European climate policy even more complicated. Companies would have to be prepared for additional information obligations. The EU should therefore make the requirements for documenting carbon footprints as simple as possible.

The authors are particularly positive about two specific measures that could have a direct economic incentive effect to reduce energy costs: Power Purchase Agreements (PPAs) would reduce market risks for both electricity producers and consumers. "The harmonization of national electricity taxes to minimum rates set by EU law would help to create a level playing field in the internal market, especially in the markets for electricity-intensive products," says cep energy expert Reichert. Overall, however, the strategy remains too vague on the financing side. This applies in particular to the financing of the planned support instruments with EU own resources.