TL/DR –
The European Commission is updating its 2023 Economic Security Strategy amidst global trade turbulence and negotiations resulting from the EU-US tariff and trade agreement. Amid these changes, climate change is expected to be less of a priority, potentially affecting green technology firms. This brief provides an assessment of the EU’s green industrial policy, explores challenges to decarbonization due to increased security issues, and proposes ways to ensure investments and policies promoting clean technologies in Europe are adequate.
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The European Commission’s Actions Towards A Renewed Economic Security Strategy
In the face of global trade turbulence and ongoing negotiations surrounding the EU-US trade and tariff agreement, the European Commission is soliciting feedback for the revision of its 2023 Economic Security Strategy. This comes as part of their response to the shifting economic, security, and geopolitical landscape, potentially affecting green technology firms that contribute to renewable energy provision. For the EU to achieve its competitiveness, economic security, and decarbonization goals, a strategic adaptation of the bloc’s green industrial policy is crucial. This report explores the EU’s green industrial policy, the hurdles to decarbonization due to increased security threats, and provides recommendations for developing suitable policies and investment strategies for clean technologies in Europe.
Rekindling Industrial Policy
Under the Biden administration, US policymaking was largely centered around three key objectives: decarbonization, competitiveness, and economic security, often linked to countering China. The 2022 Inflation Reduction Act (IRA) was, at least partly, a response to China’s “Made in China 2025” industrial strategy and its massive support for scaling up green technology production.
European concerns about the IRA stemmed from the potential exodus of EU firms to the United States, attracted by cheaper fossil energy and green tech subsidies. However, these fears didn’t entirely come to fruition, as the immediate effects of the IRA on EU trade and investment didn’t align with initial warnings. Nevertheless, the EU’s response to the Biden administration’s “post-neoliberal” industrial policy shift still holds relevancy for Europe. The IRA stirred a feeling of urgency in Europe to keep pace with US and Chinese support
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