State of the Union: EU industry to become greener and more independent

A week of intense emotions in the European Union as a ghost from the past – the collapse of a bank- came back but this time, the risks are much smaller, according to the European Commission. 

The collapse of Silicon Valley Bank appears to be having a “limited” impact on the European Union but authorities should “stay alert” to the dramatic saga unfolding in international markets, Mairead McGuinness, the European Commissioner for financial services, said.

“We’re monitoring the situation in the US carefully,” McGuinness told the European Parliament on Wednesday.

“The direct impact on the European Union seems to be limited but we should reflect on whether there are lessons to be learned for the European Union’s banking sector.”

McGuinness, however, warned of the dangers posed by stubbornly high inflation, which has led central banks around the world to hike interest rates at an unusually aggressive pace.

“We have to stay alert to this new environment. Higher inflation and rising interest rates present different challenges to financial stability,” McGuinness said.

This is not the only influence the US had in European news this week. 

The European Commission presented its industrial strategy, in response to the Inflation Reduction Act (IRA) passed last year by US President Joe Biden. The Washington legislation includes a $369-billion envelope of tax credits and direct rebates to promote investment in green technology, but only if these products are predominately manufactured in North America.

The generous injection of American money sent Brussels policymakers into a panic, resulting in a new industrial strategy designed in record time.

One of those affects clean tech. The European Union will aim to have 40% of the key technology it needs to combat climate change built within its own borders by 2030.

The goal is the centrepiece of a new strategy designed to boost domestic industry and cut dependencies on foreign suppliers, mainly China, a country that enjoys a vastly comfortable lead in the production of batteries, solar panels and wind turbines.

Competitiveness is the leitmotiv underpinning the latest plans, which were unveiled on Thursday by the European Commission under the name “Net-Zero Industry Act.”

The act identifies eight sectors as being “strategic” for the EU in both the short and long term: solar, wind, batteries, heat pumps and geothermal energy, electrolysers to produce hydrogen, sustainable biogas and biomethane, carbon capture and storage, and power grids.

Click the video to know more about the week in the EU.