Industrial Policy as an instrument to reduce dependencies and boost an EU market for green products in the resource and energy-intensive industries (REEIs)

EESC opinion: Industrial Policy as an instrument to reduce dependencies and boost an EU market for green products in the resource and energy-intensive industries (REEIs)

Increasing tensions between geopolitical blocs, supply chain problems and the need to respond to the challenges of climate change, rising resource consumption and social imbalances are now key areas of activity in European industrial policy.

The EU is responding by developing or expanding industries that are essential for long-term competitiveness and the transition to an economic system that respects the planet's limits. These include the development or expansion of industrial capacities to produce photovoltaics, microelectronics, batteries, hydrogen, etc. Resource and energy-intensive industries are an important supplier of materials and products – such as green steel, aluminum or glass - to support the green transition in many other industries. Ultimately, this transformation of industry is done through a combination of increasing production capacities and technological development.

At the same time, there is a request and a need to switch to renewable energies in energy production and in the economy. Hydrogen is seen as essential for the decarbonisation of energy-intensive industries.

Significant parts of industrial value chains are currently located abroad - especially in China -, resulting in identifiable vulnerabilities for the European economy and society. China - for example - controls large parts of the value chain for batteries and photovoltaic panels. The US just enacted the Inflations Reduction Act (IRL) which provides significant incentives for battery manufacturers and all forms of renewable energy productions, demanding that large parts of the value chains to be established within the US. Already a substantial number of companies announced plans to shift or establish productions activities to the US.  

These examples make it clear that location factors, internal company structures and industrial policy decisions in different economic areas all have an influence on the likelihood and speed of realisation of industrial investment projects.

Furthermore, the commercialisation of low-emission industrial products faces systemic barriers, including structural issues on the market, unclear demand for these greener alternatives and inappropriate consumer policy. The European Commission should, hand in hand with decarbonisation efforts, actively promote, create, and reshape markets for green basic materials produced by REIIs, such as green metals or glass. Appropriate regulation policy would lead to the success of the whole decarbonisation policy and would complement the EU’s climate neutrality ambitions in practice and at all levels.

To support the green transition and competitiveness of industry in Europe, it is therefore necessary that the EU coordinates industrial policy with other policies, notably the competition one, to pool and scale-up investments in research and development, deploy green projects in industry and increase investments in green markets. There is a need to create markets for green products produced by resource and energy-intensive industries to support the greening of other industries and society.

Furthermore, it is essential that authorisation procedures are seen in the context of investment and innovation projects that are intended to promote both economic competitiveness and the greening of the economy. For instance, in an attempt to reduce greenhouse gas emissions from steel production, 7 out of the 10 biggest steel producing countries have initiated at least one green steel project, with most of them concentrated in the EU Member States.

In addition, prudent market creation policy instruments and motivational consumer policy will be necessary to fully recognize and prioritise the value of (and demand for) low carbon industrial materials and to increase demand for products made from these materials, thus supporting the green transition across EU industries.

This OIO has the following objectives:

  • analyse to what extent European industrial policy is sufficient and coordinated with other policies, notably competition policy, to accelerate the creation of markets for green products and reduce dependencies, focusing particularly on REIIs.
  • support the European institutions in designing effective approaches and market creation policy instruments to allow for a full-fledged EU market for green products for REIIs (such as green steel, aluminium and glass);
  • ensure that any initiatives in this regard are prepared in collaboration with all crucial stakeholders - especially the REIIs industries - and consider their views and suggestions;
  • promote such regulation of green products and markets products that makes full use of their low-carbon characteristics, low environmental footprint and their properties as valuable circular material.