Is the EU’s green industrial policy doomed to fail?

The EU is attempting to increase domestic production of net-zero technologies through the Net-Zero Industry Act (NZIA) and other strategies to reduce dependencies on China and the US. However, the author contends that the EU lacks the necessary funding to meet its 2030 targets, such as producing 40 per cent of its installation needs domestically. The document highlights a conflict between 'frugal' member states and those seeking a European Sovereignty Fund, leading to a reliance on the Temporary Crisis and Transition Framework (TCTF). This framework allows national 'matching aid', which the author argues creates unfair competition between wealthy nations like Germany and France and smaller states like Belgium. The text further critiques the use of non-price criteria in procurement and trade defense instruments, such as the Foreign Subsidies Regulation (FSR), noting they can increase costs for taxpayers and slow decarbonization. The author concludes that targeted, conditional European-level subsidies are the only viable way to ensure a just and cohesive green transition.

• The EU has set ambitious 2030 manufacturing targets for net-zero technologies, aiming to cover 40 per cent of its installation needs domestically. Specifically, it seeks to increase solar PV capacity from 1 GW to 30 GW, wind turbine capacity from 13 GW to 36 GW, and battery cell capacity from 75 GWh to 549 GWh.
• European production of green technologies faces a significant cost disadvantage compared to China. Solar panels in China are estimated to cost $0.15 per watt versus $0.3 per watt in the EU; batteries are roughly a third cheaper, and wind turbines are approximately 20 per cent cheaper in China.
• The lack of a centralized European Sovereignty Fund, opposed by 'frugal' member states including Denmark, Finland, Sweden, and the Netherlands, has led to the creation of the more limited Strategic Technologies for Europe Platform (STEP) in February 2024.
• The Temporary Crisis and Transition Framework (TCTF) allows member states to provide 'matching aid' to prevent investments from leaving the EU, but this risks fragmenting the single market because wealthier nations like Germany and France have significantly more resources to attract companies than smaller states like Belgium.
• The Net-Zero Industry Act's 'resilience criterion' allows member states to favor EU suppliers over dominant exporters, but this is limited by a 20 per cent cost difference threshold, which is often exceeded by the price advantage of Chinese rivals.
• The European Commission is using trade instruments and the Foreign Subsidies Regulation (FSR) to limit Chinese competition, but these measures can increase costs for taxpayers and slow the energy transition. For example, an FSR investigation led a Chinese company to withdraw from a Bulgarian train tender, likely increasing costs by hundreds of millions of euros.

APA

De Ville, F. (2024). Is the EU’s green industrial policy doomed to fail? Green European Journal. https://www.greeneuropeanjournal.eu/is-the-eus-green-industrial-policy-doomed-to-fail/

Chicago

De Ville, Ferdi. Is the EU’s green industrial policy doomed to fail? Green European Journal, 2024. https://www.greeneuropeanjournal.eu/is-the-eus-green-industrial-policy-doomed-to-fail/.

Wikipedia

{{cite report |last1=De Ville |first1=Ferdi |title=Is the EU’s green industrial policy doomed to fail? |publisher=Green European Journal |date=25 June 2024 |url=https://www.greeneuropeanjournal.eu/is-the-eus-green-industrial-policy-doomed-to-fail/ |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{deville2024eus, author = {De Ville, Ferdi}, title = {{Is the EU’s green industrial policy doomed to fail?}}, institution = {Green European Journal}, year = {2024}, month = jun, url = {https://www.greeneuropeanjournal.eu/is-the-eus-green-industrial-policy-doomed-to-fail/}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }