In a debate at the Competitiveness Council on Thursday 27 February, almost all the Ministers of the EU Member States expressed their support for the overall objectives of the Green Deal for climate neutrality by 2050 and recognised the role of industry in contributing to the green transition, while stressing the need to preserve European competitiveness in the face of often unfair international competition.
The interventions of the delegations were therefore in line with the concept of “competitive sustainability” promoted by the European Commission. The usual broad lines of approach have emerged once again: the Central and Eastern European Member States emphasise the cost of transition, the Nordic States highlight the role of competition and the preservation of the single market, the Western European States advocate a more proactive policy, with a rather ambiguous Germany, and the island countries, such as Malta and Cyprus, emphasise the specific features of their insularity.
On sustainability, almost all Member States have agreed on climate-neutral targets for 2050. Unsurprisingly, Poland has not explicitly expressed its support for these objectives, but the country has indicated that it is pursuing ambitious policies aimed at energy transition. The Czech Republic, for its part, has clearly rejected the new targets announced by the Commission for reducing emissions by 2030 (-50 to 55% reduction compared to 1990), insisting on the need to take account of the time needed for industries to adapt. Cyprus explained that “big bang” measures, which would be too costly for its industry, should be avoided. Austria warned of the creation of a new bureaucratic “monster”, generating regulatory mountains, especially for SMEs.
All the ministers recognised the role that the digitisation of society can play, particularly the role of artificial intelligence (France in particular insisted on the subject), to enable industry to make this transition, but also to increase productivity and reduce costs and thus relocate certain companies. Several ministers also stressed the crucial role that communication with citizens and businesses, in particular SMEs, can play.
Green competitiveness and international competition
But it is competitiveness that most national interventions have focused on, with many fearing that environmental and climate standards will undermine European industry in the face of increasingly aggressive and often unfair international competition (due to heavy subsidies). Many delegations insisted on the predictability of measures in the long term in order to ensure legal certainty for industries, as pointed out by Germany, which called for a detailed impact study on the subject.
Germany expressed concern that some decisions that have already been taken, in particular on the ETS, may be set aside due to the new priorities of the European Commission. This also applies to the emission targets for the automotive sector, as this Member State considers the legal uncertainty to be fatal for the European economy, as it slows down investment in innovation.
The border carbon adjustment mechanism has been on many lips, with France and the Netherlands taking a clear stance in its favour. Spain has asked for the Commission to come forward with a proposal more quickly, as early as the second half of 2020 and not in 2021. Others were more critical: Bulgaria considered that the initiative would not be sufficient to combat carbon leakage; Lithuania indicated that it was necessary to ensure that certain Member States did not use energy from non-Member States that did not meet European standards.
European champions. The ‘Battery Alliance’ has been cited on many occasions as an example to follow, with the exception of Poland, which has expressed concern that this type of initiative will gradually replace cohesion policy. The Netherlands, for its part, considered that these initiatives would not be sufficient. The proposal to launch a ‘Hydrogen Alliance’ has been taken up by many states as well: Portugal has said that it wants to be a pioneer in this field. Austria, in view of the shortcomings revealed by the coronavirus crisis (see other news), insisted on action in the pharmaceutical industry sector. It stressed the need to relocate certain key pharmaceutical industries specialising in penicillin and antibiotics.
Just Transition Fund. In addition, the Just Transition Fund was cited regularly. The Czech Republic, while welcoming the initiative, called for the funding to actually be additional to other European funds. Italy insisted that the use of this new Fund should be as flexible as possible. Spain, for its part, said that it had been disadvantaged by the Fund’s earmarking, which does not take into account the efforts it has made for its energy transition. For its part, Greece recalled that industrial policy should contribute to the objectives of cohesion policy.
Thierry Breton, Internal Market Commissioner, concluding the session, recalled that the Green Deal was an opportunity, not a constraint, and that it was a project of a generation. For him, the challenge requires “unconventional” means, but also to ensure fair competition, stressing the importance of a border adjustment mechanism. But according to him, the key is to invest in research and innovation. “Without technology, there is no Green Deal”, he said, before announcing that the Commission would create a common data space for the Green Deal.
The Commission will present an industrial and SME strategy on 10 March, draft versions of which have leaked in recent weeks (see EUROPE 12418/2, EUROPE 12431/11). (Original version in French by Pascal Hansens)