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How the EU can match the US Inflation Reduction-Act

10 February 2023 - Foreword of the week - By : Thomas PELLERIN-CARLIN

Last August, the US Congress adopted the Inflation Reduction Act (IRA). It became the epicentre of EU fears of seeing cleantech projects, like battery or solar panel gigafactories, settling in the US rather than in the EU. There is some rationality behind that fear. The IRA indeed provides sizable public funding, with 10 years predictability and the simplicity of having a single federal level scheme. Moreover, the IRA does not only subsidize cleantech manufacturing. For instance, in the case of electric vehicles, the IRA supports the mining of critical minerals, the manufacturing of the battery, the purchase of the electric car and the production of renewable electricity. In other words, with IRA the US now has a genuine long-term climate investment plan.


The IRA is a wake-up call for the EU, as is China’s Five years Plan and Japan’s 20 trillion Yen Green Transformation Programme. Let’s be clear. Seeing major Governments organising long-term climate investment plans is great news for climate action. In our latest brief published today, I4CE argues that the logical solution is an EU long-term climate investment plan. Yet, there is currently little political appetite for such a discussion. The Institute therefore recommends the European Commission to use the existing political momentum around the IRA and cleantech, to propose an EU Cleantech Investment Plan that focus on the scale-up and manufacturing of key clean technologies. The EU should scale green public procurement and launch EU-wide support schemes, as part of this plan.


Today the 27 Heads of States and Governments of the EU reconvene for a Special European Council. They should use this opportunity to provide political backing to an EU cleantech investment plan, and task their ministers to map and assess their own national schemes to identify synergies and gaps. This would help the European Commission design its Net-Zero Industry Act, tabled for 08 March 2023. However necessary, such Cleantech Investment Plan should only be the first step for a wider discussion. The EU needs to build a long-term climate investment plan that tackles all climate investment needs, such as public transport infrastructure or targeted support for low-income and middle-class Europeans. This is crucial to ensure EU, national and private investments turn all the European Green Deal objectives into tangible realities for businesses, workers and families.


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To learn more
  • 05/12/2023 Foreword of the week
    Green industry: the game is kicking off

    Faced with international competition exacerbated by the US Inflation Reduction Act, Team Europe (and longtime team member, France) is preparing its response. The team’s tactics tackle two challenges: greening existing industrial sectors such as steel or cement, and industrialising the production of green goods, particularly those cleantechs that will make the transition a reality, such as heat pumps or electrolysers. To meet the first challenge, the French government has put 5 to 10 billion euros of public money on the table to decarbonise the most polluting production sites, in return for private investment. But has the extent of the industrial investment needs been properly assessed?

  • 05/11/2023
    Investments to decarbonise heavy industry in France: what, how much and when?

    Industry: relocation and decarbonisation at the heart of the debate. The recent succession of crises (health, energy, geopolitical) and increased international competition have prompted France to look for ways to strengthen its industrial and energy sovereignty. It faces this challenge in addition to the challenge of decarbonising its industry. In this context, France and Europe are developing industrial policies with two objectives – relocation and decarbonisation – and with new tools such as the France 2030 plan and the Net Zero Industry Act at the European level. These policies target both ‘historical’ industries, such as steel and cement, and new clean technologies, from solar to batteries.

  • 05/10/2023 Blog post
    The Net-Zero Industry Act: Designing Europe’s launchpad for a cleantech investment plan

    As the world enters a new era of cleantech competition, policymakers must confront two key policy questions – regulation and investment. The Net Zero Industry Act is Europe’s response to the former. Yet key concerns around permitting, sectoral targets and the scope of the Act will need to be addressed if it is to be effective, argue Thomas Pellerin-Carlin and Ciarán Humphreys in this blog post.

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