Honourable Members,

Last Friday, I met with President Biden in Washington. We had a very good discussion on the Inflation Reduction Act. There is a striking symmetry between the Inflation Reduction Act and the European Green Deal. Both of them are simultaneously a climate strategy and a strategy for investment and growth. Both of them include funding for a just transition. And both include regulatory standards. Only on carbon pricing – a very important instrument – the United States system is still much more limited than ours. In other words, the two biggest and most advanced economies in the world are now moving in the same direction. Therefore, I welcome the Inflation Reduction Act for its massive investment in clean tech.

But you might perhaps recall that we discussed it already in November, some aspects of the Inflation Reduction Act were of concern to us and needed solutions. Now I am happy to report that we have found solutions. On Friday, President Biden and I confirmed the understanding on electric vehicles that allows European carmakers to get access to the US market, and thus to US tax breaks. Second, we launched discussions on a critical raw materials agreement. The aim is to ensure that critical raw materials for electric vehicle batteries, whether they are extracted or processed in the European Union, are treated in the same way as if they came from the United States. Thus, this will secure strong supply chains for batteries in Europe and ensure access to the US market. And my third point: we started a transparency dialogue on incentives for the clean-tech industry.

That is good news overall. But let me be clear: negotiations can only solve some of the most concerning issues. The big bulk of work still lies with us in Europe. We Europeans need to get better at nurturing our own clean-tech industry. We need to speed up, we need to simplify procedures, we need to grant better access to public and private finance.

If there is any doubt, let me give you three figures that underscore why this is so important. Global investment in the clean transition topped USD 1 trillion dollars last year. That is 30% more than the year before. And if you look at the global market for net-zero technologies, it is set to triple by 2030. In other words: the race is on. The race on who is going to be dominant in this market in the future. We must get our act together if we want to stay front-runners. We must nurture our own clean-tech industrial base, both to create good jobs, well-paying jobs here in Europe and, of course, to ensure access to the clean solutions we so urgently need. And that is what the European Green Deal Industrial Plan is all about.

The centrepieces of the Green Deal Industrial Plan are two legal acts. The first one is the Net-Zero Industry Act and the other one is the Critical Raw Materials Act. The Commission is proposing those two legal acts this week, actually tomorrow. Let me reflect on both. With the Net-Zero Industry Act, we are setting the ambition. By 2030, we want to be able to produce at least 40% of the clean tech that we need here to fulfil our green transition. Therefore, the Net-Zero Industry Act is all about speed and facilitation. We are facilitating permitting. We are working with regulatory sandboxes. We are creating simpler state aid schemes. And we are allowing for tax breaks and the flexible use of EU funds. So in short, the Net-Zero Industry Act provides speed, simplification and it provides funding.

The second centrepiece is the Critical Raw Materials Act, which the College will also adopt tomorrow. This is about securing the supply for critical materials which are badly needed for the digital and green transition. These minerals, as you know, power phones and electric vehicles, chips and batteries, windmills, solar panels, you just name it. In other words: we cannot function without the critical raw materials. And the demand for critical raw materials will dramatically rise over the next several years and decades. But, and we have discussed that here in the hemicycle before, as you all know, today the European Union depends heavily on a few third countries for these strategic raw materials. Just a few examples, and you know plenty of them: we get 98% of our rare earth supply from China; 93% of our magnesium from China; 97% of our lithium from China. And you can continue this list over and over again.

Honourable Members,

We know that the pandemic and the war have taught us a bitter lesson about overdependencies: so if we want to be independent, we urgently need to strengthen and diversify our supply chains with like-minded partners. Last week, I was also in Canada, and this is a like-minded partner. There, you can see exemplary European companies doing just that: diversifying and strengthening our supply chains. For instance, sourcing low-carbon nickel to produce batteries here in the European Union. Canada is not only a reliable partner. It also shares our values, it guarantees that raw materials are mined with the highest standards, for the environment and for workers.

So our Critical Raw Materials Act will support these efforts by European companies. We want to extract more ores and minerals here in the European Union. We want to boost our processing capacity to at least 40% of annual consumption. And of course, we need to recycle more. Again, if I may jump back to Canada: I visited a company that is able to recycle 95% of lithium, cobalt and nickel from old batteries. 95% from old batteries – it is amazing to see that. So, that is the future, that is what we have to have in the European Union.

So, ladies and gentlemen, that’s our support for clean tech companies. But the issue of competitiveness is, of course, much broader. It concerns our internal market. And that is precisely the subject of the two communications that we will also publish tomorrow. We all know that our single market is the basis of our prosperity and our competitiveness. It turns 30 years old this year. But the potential of the single market is still far from having been exhausted. If you look at the various studies on the single market, they show that we could release more than EUR 700 billion if we were to harness the full potential of the single market. That begins – as you know – in capital markets or in R & D. We know that we are so strong because we are strong in basic research and development and then establish marketability. You know the examples: the mRNA vaccines were developed here in Europe and helped us overcome the pandemic. There are good reasons why this pioneering innovation was developed here. Or take another example from hydrogen research: there is nowhere in the world where, between 2011 and 2020 – so in the last decade – more patents for green hydrogen were filed than here, by us, in Europe. Those are just two examples among many. This is exactly what we need to build on.

Indeed, we Europeans have set ourselves the target of spending 3% of our GDP on R & D by 2030. But that has been our target for a long time – we first set it for ourselves in 2002. And if you look at the speed with which we are moving towards that target: yes, we’re getting closer, but very, very slowly. There is no way that that is enough. And, above all, others are quicker and others don’t sleep. While the amount we spend on R & D is – as I said – slowly rising, we see that our share of global R & D expenditure has fallen from 41% to 31% over the last 20 years.

Together with the Swedish Presidency of the Council, I would therefore like to propose to the Heads of State or Government that we increase this common EU target for research spending and that we sit down and take a close look at why investment in innovation, research and development is so slow in Europe and how we can get better. This is not only necessary for Europe’s researchers, scientists and businesses. It would also send a strong signal that we are really serious about the competitiveness of our European single market. My second point concerns an issue which you hear about time and again: red tape. It is Europe’s companies and employees that make the single market one of the world’s most attractive economic regions. Regardless of whether we’re talking about industrial giants, global market leaders, medium-sized enterprises or family firms – their success is Europe’s success. We are therefore doing everything we can to make their work easier. We know that the quality of public administration and of the legal framework is key to competitiveness. That is why, together, we also ensure through comprehensive impact assessments that EU laws do not burden EU businesses but support them. However, as we all know, often it is not an individual obligation to provide proof, often it is not an individual condition that makes life difficult for them. It is the huge sum of all such requirements. We will therefore look beyond departmental boundaries to see what really makes Europe more competitive and what we can do without. By the autumn we will put forward concrete proposals to simplify reporting requirements and in fact to reduce them by 25%. It won’t be easy but it’s an effort we have to make.

Our political priorities – the European Green Deal, digitalisation and geopolitical resilience – these remain unchanged because they are the right priorities. We set them 3 and a half years ago and they have proved to be right, even and especially during these times of crisis. But we want to make them less costly to implement, in particular for our small and medium-sized businesses. We have proof that we can do this because, in rolling out renewables, we have shown the momentum we can actually create through targeted legislation for faster and more flexible authorisation procedures. So in future this should be the rule, not the exception. And one final point: Europe’s single market is strong. We can be proud of it and we must do our utmost to preserve and consolidate its strength. So in future we will be guided by a series of key performance indicators, which can tell us whether Europe’s economy is really becoming more competitive and whether our discussions are heading in the right direction. How is the share of private investment evolving? Is there a growing number of businesses with fast internet connections? How many adults are enrolled in continuing vocational training? And so on. All these data are available. There is no need to gather more. But we are not doing anything with these data. Using these data and using these KPIs, we can make an objective assessment of whether and how we are progressing. In other words, these are not just assumptions but concrete, evidence-based figures. In future the Commission will therefore report to Parliament once a year on developments in these key figures, these KPIs.

Honourable Members,

With a war on our doorstep, with volatile energy prices, and massive clean-tech investments worldwide, Europe has to up its game. I am looking forward to developing further the proposals we are putting on the table today. This is our answer.

Source: ec.europa.eu