Davos 2023: EU to counter game changing U.S. climate move with own law
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[January 17, 2023]
By Maha El Dahan and Jan Strupczewski
DAVOS, Switzerland (Reuters) - The European Union responded on Tuesday
to U.S. moves to boost its energy transition with plans to make life
easier for the bloc's green industry, saying it would mobilize state aid
and a fund to keep firms from moving to the United States.
European Commission head Ursula von der Leyen told the World Economic
Forum (WEF) annual meeting in Davos that the moves would be part of the
EU's Green Deal industrial plan to make Europe a centre for clean
technology and innovation.
"To help make this happen, we will put forward a new Net-Zero Industry
Act," she said. "The aim will be to focus investment on strategic
projects along the entire supply chain. We will especially look at how
to simplify and fast-track permitting for new clean tech production
sites," she said.
"To keep European industry attractive, there is a need to be competitive
with the offers and incentives that are currently available outside the
EU," von der Leyen added.
Earlier, International Energy Agency (IEA) executive director Fatih
Birol told a WEF panel that energy security was now the biggest driver
of climate investment, as countries seek to ensure their supplies.
Birol said the U.S. Inflation Reduction Act (IRA), which was signed by
President Joe Biden last year, would drive investment into cleaner
energy and represented the most important climate deal since the
landmark 2015 Paris Agreement.
'MONEY, MONEY, MONEY'
U.S. climate envoy John Kerry told a separate panel on financing the
transition to a low carbon economy that the only way to avoid
catastrophic damage caused by climate change was for governments and
companies to spend big.
"How do we get there? The lesson I have learned in the last years ... is
money, money, money, money, money, money, money," Kerry said of what was
needed for the world to stand any chance of meeting the Paris agreement
goal of limiting global warming to 1.5 degrees Celsius above
pre-industrial levels.
While European countries have welcomed the new commitment to energy
transition by Biden's administration, some have said they fear it may
disadvantage their companies.
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EU Commission President Ursula von der
Leyen give a statement with NATO Secretary General Jens Stoltenberg
(not pictured) before a meeting with EU Commissioners in Brussels,
Belgium, January 11, 2023.REUTERS/Johanna Geron
"I understand the importance of the Act from a U.S. perspective but
on the other side I should also think about European interests,"
Jozef Sikela, the Czech minister of industry and trade, said on the
same WEF panel as Birol.
Sikela said European households and industries were paying the
biggest bill for the global energy crisis, while the new U.S.
legislation would pull away investors and force governments to
compete on the level of subsidies.
"When we start a rally of subsidies, this is dangerous," he said,
adding that Europe should be lobbying for exemptions.
'TARGETED SUPPORT'
Europe's energy crisis, triggered by Russia's invasion of Ukraine 11
months ago, has been felt across the 27-member EU, with gas prices
almost 90% higher last year than the year before.
Von der Leyen did not give any details of the proposed fund, an idea
she first raised in September, which does not yet have the support
of all EU governments, notably Germany.
"As this will take some time, we will look at a bridging solution to
provide fast and targeted support where it is most needed," she
said, without giving any details, adding that the Commission was
pinning down the needs of the green industry.
Vicki Hollub, chief executive of U.S. oil producer Occidental
Petroleum Corp, earlier called the U.S. legislation one of the most
transformative bills ever signed.
But she rounded on European governments for taxing fossil fuel firms
that were also developing renewable energy.
"With all due respect to Europe, I hate to say it but I have to say
it, imposing windfall profit tax on the oil companies that are doing
their best to grow wind and solar in Europe was not the smartest
move, in my opinion," Hollub said.
Subsidies are very important for the development of new
technologies, she told the WEF panel with Birol and Sikela.
(Editing by Leela de Kretser, Andrew Heavens, Alexander Smith and
Alex Richardson)
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