March 5. 2024. 2:12

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French minister: EU must do away with ‘industrial and ecological naivety’

As the EU sets up its response to the US Inflation Reduction Act (IRA), French industry minister Roland Lescure told EURACTIV that Europe is on the cusp of a “new green industrial revolution” – if only governments are ready to spend the necessary cash.

The IRA, which consists of a $400 billion (€369 billion) tax break and investment package to decarbonise the US economy, acted as a wake-up call for Europe, Lescure said.

“We have finally realised the urgency and scope of the challenge [to make European industries carbon-neutral],” he told EURACTIV France.

‘Decarbonising’ the economy is a two-part process: “making incumbent industrial actors greener, and developing a new decarbonisation industry”, the minister explained.

It’s a long and windy road, he acknowledged – especially since the green economy isn’t profit-generating at the get-go, so “public money is necessary”.

The EU must do away with “industrial and ecological naivety” and proactively step up finance for the green transition, he argued.

At the same time, European leaders must realise geopolitical realities between China, the US and the EU have changed, Lescure said, adding that the EU free-trade agenda must see these new realities for what they are, rather than adopt a rosy globalisation-as-positive view.

Does this mean entering a new era of protectionism?

“No,” he replied. “See, I like football: I prefer attack over defence. I prefer conquest to protection.”

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Just days after the Commission presented its new Green Deal Industrial Plan to counter foreign subsidies for clean industry, a leaked communication details the full extent of the temporary bending of state aid rules across the bloc, including a rule to prevent a German go-alone.

Joint borrowing still up in the air

In early February, the European Commission came up with its own “Green Deal Industrial Plan”, which includes cutting red tape, loosening state aid rules, and creating a new European Sovereignty Fund, which France openly supports.

“We need fresh public money and an EU-wide shared industrial strategy,” Lescure said.

Asked if this would imply a new round of joint borrowing following the €800 billion coronavirus recovery fund in 2020, the minister remained evasive.

“I don’t want to get stuck on one specific financial tool. Being a hardliner might make me look popular in Paris, but I’ll be inefficient in Brussels,” the minister said.

In the short run, Lescure is in favour of rerouting €250 billion from the existing coronavirus fund into this new European Sovereignty Fund “before we start thinking of new sources of cash”. Moreover, the EU must also do “all it can to simplify industries’ access to state aid,” he added.

Germany, Austria and Finland have already rejected suggestions to take on more EU debt, making any deal uncertain. The European Commission is expected to table its proposal for a European Sovereignty Fund in the summer of 2023, alongside a wider EU budget review.

Austria, Finland united in opposing new EU joint debt

Austria and Finland locked shoulders in opposing new EU joint debt ahead of the Munich Security Conference amid growing calls to up EU spending to face competitors like the US.

EU countries agreed to a “once in a lifetime” €750 billion …

European electricity market reform

In the global race to net zero, Lescure said he is convinced that France has a comparative advantage: nuclear power.

“It’s low-carbon and cheap electricity; even Japan is investing in nuclear again, in spite of the 2011 Fukushima disaster.”

According to him, developing nuclear technology across the EU is necessary: “France is on the right side of history”, he said. This goes hand in hand with investing in renewables too, Lescure was quick to add.

To this effect, ‘technology neutrality’ must be preserved and cherished, Lescure said in reference to an EU principle according to which no single technology should be favoured over another to reach net zero.

Ultimately, this would give France ample leeway to develop its own nuclear capacities while “helping to build a robust and sovereign European electricity market”, he said.

The reform, he added, must not wait until the 2024 European elections, as suggested by Germany. “As long as the war in Ukraine rages on and energy supplies aren’t stable, the electricity market will be under pressure,” he argued.

French industrial leaders and French power utility EDF should sign long-term electricity contracts, he suggested, in a nod to power purchasing agreements supported by Berlin and Brussels to mitigate price volatility.

Paris drafts European ‘nuclear alliance’

French energy transition minister Agnès Pannier-Runacher will meet on Tuesday (28 February) with twelve counterparts in Stockholm to discuss the potential launch of a brand new “nuclear alliance” within the EU.

Critical raw materials

Another fundamental issue is access to critical raw materials – such as lithium, cobalt, rare earths and others – which are essential for manufacturing green technologies like batteries, wind turbines and solar panels.

On these essential minerals, the EU is currently almost entirely dependent on imports, particularly from China.

“We must look for these materials all over Europe,” Lescure said, insisting that a strategy is needed across the entire value chain – from the extraction of metals all the way to recycling.

Two lithium mining projects have been announced in France, “which must be sustainable, with minimal environmental damages”, the minister said. Large amounts of nickel can also be found in New Caledonia, a French island near Australia.

Only through high environmental standards can mining for critical raw materials be made socially acceptable, Lescure told EURACTIV. “We must take responsibility and accept that decarbonisation is complex [while extracting resources on European soil]”, the minister said.

An EU Critical Raw Materials Act is expected to be released by the European Commission in mid-March.

However, Lescure rejected the notion that Europeans should drastically scale back consumption to meet environmental goals.

“I am in total disagreement with those who think energy savings and production cannot go together,” he said. Rather, the French minister believes cutting back on energy consumption where possible “is compatible with ‘good’ growth”, as long as governments are there to support the transition.

Degrowth, on the other hand, is “anti-social”, Lescure concluded.

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Since the onset of the war in Ukraine, the EU has been increasingly wary of dependency on China, especially regarding critical raw materials. According to MEP Hildegard Bentele, the EU should prepare for the eventuality of a Chinese attack on Taiwan and potential subsequent sanctions and supply shortages.