Speaking at Davos 2023, European Commission President Ursula von der Leyen, said the Net Zero Industry Act will go hand in hand with the Critical Raw Materials Act.

She said, “For rare earths, which are vital for manufacturing key technologies – like wind power generation, hydrogen storage or batteries – Europe is today 98% dependent on one country – China. Or take lithium. With just three countries accounting for more than 90% of the lithium production, the entire supply chain has become incredibly tight.

“This has pushed up prices and is threatening our competitiveness. So, we need to improve the refining, processing and recycling of raw materials here in Europe.”

In parallel, it will work with trade partners to cooperate on sourcing, production and processing to overcome the existing monopoly. “To do this, we can build a critical raw materials club working with like-minded partners – from the US to Ukraine – to collectively strengthen supply chains and to diversify away from single suppliers.”

The second pillar of the Green Deal Industrial Plan will boost investment and financing of clean tech production and the third will develop skills needed to make the transition happen, she said.

“To keep European industry attractive, there is a need to be competitive with the offers and incentives that are currently available outside the EU,” she added.

“This is why we will propose to temporarily adapt our state aid rules to speed up and simplify. Easier calculations, simpler procedures, accelerated approvals. For example, with simple tax-break models. And with targeted aid for production facilities in strategic clean-tech value chains, to counter relocation risks from foreign subsidies.”

The President said it was “no secret” that certain elements of the design of the Inflation Reduction Act raised a number of concerns in terms of some of the targeted incentives for companies.

“This is why we have been working with the US to find solutions. Our aim should be to avoid disruptions in transatlantic trade and investment. We should work towards ensuring that our respective incentive programmes are fair and mutually reinforcing. And we should set out how we can jointly benefit from this massive investment, for example by creating economies of scale across the Atlantic or setting common standards.”