The European Union has unveiled a comprehensive wind power package aimed at countering the rising influence of China in the clean tech sector and bolstering its own industry. Faced with the threat of losing its clean-tech industry to the United States, the EU is now shifting its focus to addressing China as the primary competitor. The package reflects the EU’s determination to prevent its wind industry, which includes companies like Siemens Energy AG and Vestas Wind Systems A/S, from facing a fate similar to the solar sector a decade ago, which saw the majority of solar panel production relocate to China.
Challenges and Confident Stance
Earlier this year, the EU expressed concerns that its clean-tech industry might be lured away by the US, attracted by tax credits and reduced bureaucracy. However, these concerns have since diminished. The EU now appears increasingly confident that its companies will not abandon Europe for the US due to President Joe Biden’s Inflation Reduction Act.
Protecting Industrial Champions
In an effort to protect its industrial champions during the transition to cleaner technologies, the EU is determined to safeguard its world-leading wind industry. This initiative aims to prevent a repeat of the solar sector’s exodus to China.
Market Openness and Security
Kadri Simson, the EU’s energy commissioner, emphasized that while the EU remains open to global markets, it is also committed to addressing security concerns.
Trade Imbalance
In 2022, the EU had a record trade deficit of €462 million ($492 million) with China in the wind sector. Prices in China are, on average, 20% lower than those in Europe and the US.
EU’s Plan for Wind Industry
The EU’s plan includes measures to support its wind industry. This support involves improving access to EU financing, expediting permitting processes, and revamping how countries conduct auctions for renewable energy projects. The new approach will consider factors beyond cost, such as cyber-resilience and the carbon footprint of new wind farms.
Impact of US Clean-Tech Law
The European Commission conducted its first assessment of the impact of the US clean-tech law. The report found that the macroeconomic effects of US subsidies and tax breaks have been limited so far. While the law may make the US more appealing for EU companies, conclusive data supporting relocation remains elusive.
Fossil Fuel Subsidies and Renewable Push
The EU witnessed a concerning trend of increased subsidies for fossil fuels, reaching €123 billion in 2022. In contrast, subsidies for renewables marginally increased to €87 billion. This goes against the EU’s position to phase out support for oil, gas, and coal at COP28 next month.
Commitment to Phasing Out Fossil Fuel Subsidies
The EU’s climate commissioner, Wopke Hoekstra, emphasized the bloc’s intention to assess fossil fuel subsidies in the first quarter of the following year and encouraged member states to phase out energy crisis-related support, including direct support schemes and tax deductions for fuel.
Challenges and Goals
The EU will also closely monitor unfair trade practices that favor foreign manufacturers in the wind sector. The EU’s ambitious target is to have renewables make up at least 42.5% of the energy mix by the end of the decade. The State of the Energy Union report underlines the need for accelerated capacity growth to achieve this goal.
Key Measures in the Plan
The EU’s plan includes several measures to enhance the wind industry, such as streamlining permitting processes, establishing a digital platform for auction planning, revising auction design criteria, identifying cybersecurity risks, and expanding support for wind energy through the Innovation Fund.
Collaboration with Financial Institutions
The EU is working with the European Investment Bank to deploy a dedicated instrument aimed at counter-guaranteeing credit exposures for key wind industry suppliers by the end of the year.
