As the European elections draw near, Paris and Berlin should move towards a common European approach to industrial policy – with three key elements: vision, funding, and governance, argue Sabine Nallinger and Thomas Pellerin-Carlin in an article on the EURACTIV website. Sabine Nallinger is managing director of Stiftung KlimaWirtschaft, a German CEO alliance of more than 30 companies from all sectors working to develop constructive solutions for transitioning to a climate-neutral economy. Thomas Pellerin-Carlin leads the EU programme of the Institute for Climate Economics (I4CE).
Call for a European green industrial policy
With the departure of sitting Commissioners and the approaching EU elections, change is in the air in Brussels. Europe needs to imagine the next phase of European climate action – a European Green Industrial Policy.
Member states, particularly France and Germany, have a crucial role. Following the adoption of the US Inflation Reduction Act in 2022, Robert Habeck and Bruno LeMaire, Germany and France’s economic ministers, declared the need for a common European industrial policy, but since then, have relied on national measures.
As the 2024 EU election nears, France and Germany should help set the debate agenda in Brussels – shifting focus from currently pursuing domestic visions of industrial policy in splendid isolation towards a common European approach.
United we stand, divided we fall
The US, China, Japan, and other large economies are pinning their economic futures on decarbonisation and cleantech. Their ambition is underpinned by ambitious industrial policies and public investment plans (such as the IRA).
The EU lacks this, instead relying on a patchwork of EU and national initiatives, leading to an estimated 0.34% of EU GDP of public investments that support clean technologies every year. By contrast, the IRA alone represents yearly investment of between 0.2-0.6% of US GDP, coming on top of other US federal programmes like the Infrastructure, the Chips Act, and major US State-level initiatives. Without greater public investment, the EU will fall behind in the global cleantech race and seeing the competitiveness of its historic industries falter.
Attempts at an EU response, namely the Green Deal Industrial Plan, have so far proved insufficient to face the scale of the competitiveness challenge Europe faces. Therefore, European businesses are calling for far greater ambition while threatening to relocate operations across the Atlantic.
What is required is a truly European green industrial policy, which must address three key issues:
First, creating an industrial policy that can put the Green Deal to work. The EU’s common economic policies have so far centred around maintaining a level playing field between member states, the cohesion of economic development and nurturing innovation.
A common industrial policy must build on this and add another step to face the challenges of the 21st century and help Europe reach its climate goals. Climate innovation should be supported to scale and reach the market quickly, supply chains should be made more resilient to secure European energy security, and existing industries should be supported to decarbonise to ensure an economy-wide transformation.
Second, find a solution to close the climate investment gap, estimated at €360bn a year. Amid an economic crisis and at a time when other large economies are betting big on cleantech, the European public investment options currently remain too complex, too small – or both.
For a truly European response, national budgets are not sufficient. A common industrial policy must create the space for more European funds to be spent quickly, simply and strategically. In the short term, the best option is to increase public funding dedicated to the EU Innovation Fund.
Third, a more effective European governance structure is required if the EU is to match American and Chinese peer institutions’ ability to act. Ambitious policy will have little effect unless the institutions that implement it take up a spirit of courage and creativity. Long permitting timelines should be accelerated, complex funding criteria simplified.
This will not be achieved overnight. Member States must empower the EU’s institutions to take a more entrepreneurial, less risk-averse role in investing and transforming Europe’s clean industrial sector.
Clean industries made in Europe
Europe’s decarbonisation and the transition from fossil power to clean, climate-neutral production poses a once-in-a-generation challenge. Greening European industry and supporting EU cleantech is not a recipe for deindustrialisation. Quite the opposite: as liquified natural gas prices look set to remain high, European industries need to get clean to maintain competitiveness. A green industrial policy should underpin such a new European economic model.
Business leaders, researchers and citizens in the EU are ready to take on the challenge of a global cleantech race. Yet without Member State support for a common industrial policy, it is unlikely that the next Commission will be able to fully play its part.
The leaders of the bloc’s two largest economies, France and Germany, need to send a clear signal that a European approach to green industrial policy and climate investments must be the foundation for the prosperity of the future.
External link
Energy in Demand - Sustainable Energy - Rod Janssen 
I am certain that the authors hearts are in the right place, but all the usual (neo-liberal) words and phrases were wheeled out
e.g1 “the scale of the competitiveness challenge Europe faces”. The top wind turbine mfus in the world? European.
e.g.2 “Climate innovation” remind me what this is again?
e.g.3 “supply chains should be made more resilient” eh? what does that mean?
Existing industries should be supported to decarbonise to ensure an economy-wide transformation”……would that be the Germany car industry? Which has consistently resisted any and all decarb efforts since … the mid-1990s & now engages in synchronised whining cos of the Chinese EV threat (but don’t worry Auntie Von der Leyen is going to get tariffs on them)
“find a solution to close the climate investment gap, estimated at €360bn a year”…….this was identified by me in 2018 – we even had a Bx round-table (a real one) on the subject. It has been known for 5? 6? Years. EU action to date…. Let’s bail out the banksters.
Speaking of money, there is one aspect not covered by the two writers – money & interest rates. Ever wonder how Chinese PV conquered the world – hero from zero (actually from almost nothing in 2005 to No 1 player in 2015). Chinese central bank funding – with “soft” interest rates. What did the EU do in the face of this…………….nada. What is the EU doing to address Chinese central bank funding for WTs, electrolysers, EVs etc etc……..nada. The ECB sits on its hands, inflicts high interest rates (you gotta fight inflation – a neo-libtard mantra) and makes sure EU industry dies with a whimper.
That the writers did not even consider this aspect speaks realms about their ability, or lack thereof, to understand core problems. The core problem in the EU is money, the cost of money, access to it and an ECB run by a bunch of neo-liberal imbeciles. That’s the problem.
You sum it up in the last paragraph very well. You’re right.