The European Union will soon be forced to confront a major green policy equation: how to accelerate and finance a new industrial policy that meets the 2050 Net Zero target and keep its citizens on board. This may prove to be Europe’s ultimate test of statecraft, embodied in the political and economic nous of Berlin and Paris that marshalled the exceptional measures needed to launch the Next Generation EU initiative in 2020.
At the centre of this is the debate over the European Union’s proposed Net Zero Industrial Act, which was announced in Brussels one week after the Inflation Reduction Act in the United States. The Act sets a self-sufficiency target of 40 per cent and involves speeding up permitting processes and easing restrictions on national subsidies. But despite lobbying from certain business interests and impassioned pleas from some members, no new funding or substantial political agreement on how to implement it has been made.
However, this isn’t to say that Europeans cannot make progress towards meeting their climate goals, nor is it a case that all progress has to come from the top down. Europe must make a political agreement on how to accelerate green industrial policy but it also needs public support to drive it. To create a movement around this, there needs to be an effort to include citizens with the policy and to find ways to support clean energy transition, such as subsidizing heat pump installation and more. Zoe, a Brussels think tank, has even proposed that the EU green industrial policy involve not just subsidies but some form of public ownership, so taxpayers can participate in the profits and risks. Additionally, forming a closer relationship with labour unions to inform green industrial policy could also help foster inter-European job creation and mobility.
Ultimately, if Europe is to accelerate its green industrial policy, it requires the same kind of statecraft and political participation which saved it in 2020. Without a combination of these two dynamics, it is highly uncertain that the EU will reach its 2050 Net Zero target.