Europe finally has its answer to President Joe Biden’s signature climate law. The EU this week unveiled a series of proposals aimed at catalyzing its clean energy economy and securing the minerals needed for a transition away from burning fossil fuels. In addition to meeting global climate goals, the move is an effort to mitigate the trans-Atlantic uproar that greeted the “Made in America” provisions of Biden’s $369 billion climate law. The American law offers tantalizing incentives to low-carbon energy companies that have operations in the U.S. and use materials sourced in the United States. Without similar cash or tax bonanzas on the table in Europe, companies there are threatening to move operations overseas. That has stoked fear across the continent that European industry faces an existential decline if governments aren’t willing to inject capital into a fast-growing, increasingly competitive corner of the economy. The European Commission’s new proposals aim to cut planet-warming pollution while boosting Europe’s ability to compete with both U.S. investments and China’s decadelong effort to dominate the market for electric car batteries and other energy technology, writes POLITICO’s E&E News reporter Sara Schonhardt. “The race is on,” commission President Ursula von der Leyen said in an address to the European Parliament. At the center of Europe’s Green Deal Industrial Plan, as it’s called, is the Net-Zero Industry Act, which sets a target for the 27-nation bloc to produce at least 40 percent of its clean energy needs domestically by 2030. The commission is also proposing a Critical Raw Materials Act aimed at reducing EU dependence on certain countries — primarily China — for lithium, rare earths and other minerals used to make products such as wind turbines, solar panels and electric vehicle batteries. While the package itself wouldn’t provide specific subsidies or financial incentives, it would create a regulatory environment needed to direct funding to European clean energy industries, whether through tax breaks or leftover pandemic recovery funds. That dynamic has left some European officials frustrated with what they see as an abandonment of free-market ideals in favor of picking winners. “This direction is quite dangerous,” Günther Oettinger, Germany’s former European commissioner, told a team of POLITICO reporters. “It’s not a single market, it’s a planned economy more and more: a centralized, planned economy.” There are still many kinks to be worked out between the European Union and the United States. European leaders have been pressuring the Biden administration to scale back its domestic sourcing provisions, with mixed results. Von der Leyen and Biden agreed last week to coordinate on subsidies.
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