EU wants manufacturing capacity for clean tech to meet 40% of local need

Brussels has said it wants enough manufacturing capacity for clean technologies within the bloc to meet two-fifths of domestic needs while allowing EU governments to override environmental considerations in order for key projects to go ahead.

In a draft proposal seen by the Financial Times, the European Commission said that in five key sectors — solar, wind, heat pumps, batteries and electrolysers — the bloc’s production capability should be able to meet at least 40 per cent of the EU’s requirements as it tries to reach its target of net zero emissions by 2050.

The highest targets set are for the wind and heat pump sectors, at 85 per cent.

The document, due to be presented on March 14, is a direct response to the US Inflation Reduction Act, announced last August, which provides $369bn in tax credits and subsidies for clean energy technologies.

The US IRA has caused panic among EU policymakers as they fear an exodus of European manufacturers across the Atlantic. It has also forced a reappraisal of the bloc’s relationship with China, upon whom it is reliant for more than 90 per cent of its imports in the solar sector, for example.

Ursula von der Leyen, commission president, is due to meet US president Joe Biden next week to discuss the IRA.

In an effort to speed up the deployment of clean power across the EU, the commission’s proposal suggests that national governments be allowed to fast-track industrial projects that have an “adverse impact on the environment” if authorities consider “the public interest served by the project should override those impacts”.

It also sets out definitions for so-called Net Zero Resilience Projects — strategic projects that will boost the EU’s autonomy in sectors where it is currently more than 80 per cent reliant on a third country or on countries with whom it does not have trade deals.

Such schemes will also have to meet certain limits on greenhouse gas emissions as well as providing jobs and development in the region where they are based.

The length of the approval procedures should not be more than 18 months, with timeframes set for different types of projects, according to the draft. Currently permitting times for wind and solar projects can be as long as eight years.

The commission did not immediately respond to a request for comment on the draft.