This should be “THE law of Made in Europe”, promised the European Commission’s Executive Vice-President for Prosperity and Industrial Strategy, Stéphane Séjourné. On 29 January, the Commission is due to propose a regulation establishing a framework of measures to accelerate industrial capacity and decarbonisation in strategic sectors, the “Industrial Accelerator Act”.
Its task will be to set criteria for local production and content in the context of public procurement, foreign direct investments or public auctions, in the most strategic sectors of industrial transition, where the EU is particularly struggling.
The production of wind turbines or solar panels in the EU will therefore have to contain a minimum of EU components.
“The EU’s manufacturing global market share of these technologies is declining. Production is highly concentrated in China, which accounts for over 80% of solar photovoltaic and battery manufacturing capacity”, writes the Commission. For other net-zero technologies, such as heat pumps and geothermal, EU production depends heavily on components from non-EU suppliers. Without decisive action, the EU risks becoming even more dependent on imported clean technologies, precisely at a time when its global partners are accelerating their industrial strategies and weaponising their industrial successes.
The automotive sector is also affected by this regulation, with ‘European’ requirements for public procurement and purchases by local authorities.
Acceleration will also mean a single permitting procedure and “priority industrial acceleration areas”.
The overall aim of this legislative proposal is “to ensure that the manufacturing industry accounts for at least 20% of the Union‘s gross value added by 2030”, i.e. an effort of 5%.
The draft text explains that this will involve: - leveraging access to the Single Market to boost demand for European low-carbon industrial products and net-zero technologies and maximising the quality and benefits of foreign investment in the EU; - deploying manufacturing projects at scale by speeding-up and simplifying permits for manufacturing projects, as well as by facilitating the emergence of industrial clusters in industrial acceleration go-to areas; - and facilitating differentiation for low-carbon steel products to increase their value and marketability.
The Commission also promises to limit itself to the minimum necessary requirements, without unduly hampering the market and technological development or disproportionately increasing the cost of certain materials and products.
The text, as envisaged in this initial draft, should therefore lay down conditions for the approval of foreign direct investments.
“Investment Authorities shall approve only those foreign direct investments that fulfil the following conditions: - foreign investors shall not, whether directly or indirectly, acquire, hold, or exercise ownership interests representing more than forty-nine percent (49%) of the share capital, voting rights, or equivalent ownership interests in any Union target, or equivalent ownership, leasehold or other rights conferring control over a Union asset”; the “Union target, the joint venture defined in point (b) or the legal entity acquiring or owning the Union asset shall, at the time of implementing the foreign direct investment and continuously throughout its operation, employ at least 50% of Union workers across all categories of the workforce, including operational, technical, supervisory, and managerial positions. Such employment shall be accompanied by appropriate training and capacity-building measures”.
The “products placed on the Union market by foreign direct investment undertakings shall incorporate inputs of which at least 50% are manufactured within the Union”.
The text should also promote a unified ‘permit granting procedure’, covering all relevant permits to build, expand, convert and operate industrial manufacturing projects.
The identification of industrial acceleration areas will be the responsibility of the Member States, and these areas will have even easier conditions for issuing permits.
The text also makes a proposal for a label on carbon intensity of steel which “is needed to provide a common EU approach on calculating GHG emissions, facilitating the differentiation of low-carbon steel from high-carbon alternatives, thereby supporting the decarbonisation of the steel sector”.
Link to the project: https://aeur.eu/f/kaq (Original version in French by Solenn Paulic with Pauline Denys)