The European Commission on Wednesday presented a Green Deal Industrial Plan to enhance the competitiveness of Europe's net-zero green industry, faced with strong competition from the United States, China, Japan and other countries whose governments strongly support domestic producers.

With the Plan, the Commission is trying to prevent the flight of investments and production in the field of green technologies to the USA or China.

Japan is boosting its technology sector by issuing €140 billion in “green bonds,” the United States is providing €69 billion in subsidies and tax breaks in its Inflation Reduction Act (IRA), while Canada, India, Great Britain and many other countries are announcing they will encourage investments in clean technologies.

In addition, the European industry is faced with high energy prices, which significantly affect its competitiveness. The EU wants to be a leader in the fast-growing technology sector with net-zero greenhouse gas emissions.

“Europe is determined to lead the clean tech revolution,” said European Commission President Ursula von der Leyen.

The Plan envisages more flexible rules on state aid, redirection of existing European funds to encourage green technologies, faster issuance of permits for green projects, investment in the acquisition of skills on the labour market and the signing of free trade agreements to ensure the supply of critical raw materials.

The Commission proposes temporarily more flexible rules for approving state subsidies for investments in renewables and industry decarbonisation. But there is a danger for the Single Market since the member states do not have the same or similar fiscal capacities to stimulate production, which then violates the rule of equal market conditions for all. Therefore, as a short-term solution, the Commission proposes to use unused funds from the pandemic recovery plan in the amount of approximately €225 billion.

Funds have been secured within the framework of the next-generation EU plan, most of which are allocated to member states as grants, and some as favourable loans.

In their National Recovery and Resilience Plans, member states preferred grants, so the portion earmarked for soft loans remained largely unused.