Green Deal Industrial Plan: the EU can do better

The blueprint for a net-zero industry lacks vision on how to ensure Europe's industry stays competitive and attracts investment.

The Green Deal Industrial Plan (GDIP) and the Net Zero Industry Act (NZIA) are good overall, says the EESC. But they should be more specific as to what actions will be taken to improve locational factors, boost the competitiveness of Europe's economies and set the EU apart from its systemic rivals.

We are very critical of the fact that it has taken something like the Inflation Reduction Act in the USA to spur the EU into action, says Sandra Parthie, rapporteur of the EESC opinion on the GDIP and NZIA. We would have liked this to come earlier. We would have liked the EU to react more forcefully and with more conviction, to show our companies and societies that we really want Europe to remain relevant as an industrial location, with good jobs and good salaries for workers.

European industry has become less competitive than that of its main rivals over the past decades. Per capita GDP in the EU has dropped from around 70% of per capita GDP in the US in the 2000s, to under 66%. US and EU shares of the world's gross investment have declined from 29% to 20% and from 23% to 15% respectively between 1999 and 2020. Meanwhile China, which only had 5% in 1999, had 29% in 2020. The EU has the ability to change this: completing the single market could add more than EUR 700 billion in economic output over 10 years, and a common digital economy could contribute another EUR 178 billion. The EU could also gain more by establishing and promoting European standards globally.

To reverse this downward trend, the EESC recommends carrying out an audit to identify how the EU can control and improve its value chains and avoid excessive dependencies. It has also suggested that the EU should submit all draft legislation to a competitiveness check.

An impenetrable funding jungle

One problem the EESC points to as demanding bolder action is red tape and processing time.

Take public funding: decisions to grant projects financial support and access to funding take too long, whether we are looking at REPowerEU, InvestEU or other schemes. If we don't want investors to take their business elsewhere, the EESC argues, we need measures to ensure timely and accessible funding for both operating costs and capital expenditure, covering all types of businesses, big and small.

Permitting is another point where the GDIP is not up to scratch: it singles out a number of net-zero technologies which should get fast-track permitting and more financial support for projects, leaving other sectors to face a more difficult situation.

If it is possible to speed up and streamline permit granting, why should this only apply to certain sectors and not across the board? We don't really understand. It should be the standard way to deal with permits across the EU, says Ms Parthie.

Winner takes it all

In the EESC's view, the GDIP and the NZIA focus too narrowly on promoting green technologies and picking "winners". Instead, they should encourage a diverse industry with a wide range of sectors.  

Europe is home to a lot of energy-intensive heavy and primary industries that need decarbonising, and that are not included in the GDIP. If their concerns, such as high energy prices, are not addressed, the EU risks losing important, perhaps even strategic, parts of its industrial system.

Easing EU State aid rules is another potential trap, as it could widen the gap between richer and poorer Member States – between those that have the fiscal space to invest in the green transition and support the projects of their champion industries and households, and those that do not. They must not distort the single market and threaten the EU's economic convergence or social cohesion. This is why there should be a serious debate on a European Sovereignty Fund to provide additional EU-level financing for the transition.

Jobs, jobs, jobs

European Commission figures show that there is significant job creation potential in net-zero technology, with 180 000 workers needed in fuel cell hydrogen manufacturing, 66 000 in photovoltaic solar manufacturing and 800 000 in battery production.

The GDIP supports the development of green skills, but the EESC maintains that it should support the development of the whole variety of skills needed in industry. It should also speed up and standardise work permits for qualified workers coming from outside the European Union.

Read the EESC opinion on the Green Deal Industrial Plan

Read the European Commission's Green Deal Industrial Plan and the Net Zero Industry Act