Improve the resilience of our value chains in the context of Net Zero Industry Act

By Christian Busoï, MEP (EPP Group – RO), Chair of the ITRE Committee

Clean technologies play a key role in shaping the transformation of the energy industry and supporting the decarbonisation of all sectors of the economy. Clean energy technology supply chains involve new opportunities, but also new risks and vulnerabilities. Disruptions to clean energy technology supply chains may lead to a delayed and more expensive energy transition. Therefore, making clean energy supply chains secure, resilient and sustainable is a priority for the EU.

The Union industrial strategy should be designed both for securing European leadership in clean energy technologies and for improving the existing industrial base and supporting its transformation in the future to provide high-quality jobs and economic growth for all Europeans in order to achieve the objectives of the Green Deal.

The ninth legislature of the European Parliament has been characterised by exceptional events.

The European industry has being challenged on everything from unforeseeable events such as COVID-19, post-COVID supply chains disruptions, record high energy and commodity prices, high inflation, rising interest rates, and ultimately, Russia’s unprovoked and unjustified aggression against Ukraine.

Despite these storm winds, the EU economy has held up remarkably well and political unity has payed off. The efficiency of the cooperation between co-legislators, the Council and the European Parliament, has reached its maximum in the area of energy security, with the approval of the regulation on minimum gas storage obligations in just three months, a record time for the ITRE Committee I am proud of chairing. We have been calling for a holistic approach for incentives to support strategic industrial sectors and their supply chains, which are facing a sharp increase in the costs of energy, transport and raw materials.

Now our European industry is facing a new competition challenge coming from increasingly fragmented global markets.

As regulators, it is our privilege and duty to improve the resilience of European value chains to continued change and upcoming challenges. We already understood how the green and digital transitions strengthen our industrial competitiveness, how the European Green Deal and a strategic industrial policy go hand in hand. Now we need to shape our regulatory environment to allow a fast scale-up of clean and renewable energy, create the best conditions for sectors that are crucial to reach our net-zero target, foster technologies like wind turbines, heat pumps, solar panels, renewable hydrogen as well as CO2 storage. We need faster and more flexible planning and permit procedures, but also more policy coherence and coordination on the wider climate and environmental agenda.

We know that currently, the EU depends heavily on a very limited number of suppliers for all the strategic technologies in several stages of their supply chains and, for some technologies, throughout the complete value chain. We already experienced with Russia how untrustworthy suppliers can exploit and weaponise such dependencies to their advantage. In that exceptional situation, we reacted to Russia’s actions approving in record time the gas storage regulation, learning an important lesson.

This time, we are ahead of the events. We are now reforming the electricity market design to limit the impact of gas price spikes on electricity consumers, providing power producers with revenue stability, shielding industry from price volatility.

We are beginning a thorough analysis of the Critical Raw Material Act recently proposed by the Commission to reduce excessive European dependencies on single suppliers.

The reinforcement of Union open strategic autonomy requires a combination of different solutions, including diversifying suppliers through sectoral partnerships and alliances, reducing energy and material use, boosting EU manufacturing and production capacities, increased investments in strategic sectors and fostering innovation and research and development. We are aware that in the new geopolitical context, we must boost the European industrial competitiveness, sustainability and security, reduce administrative burden, and create breathing space for our industry.

One of the most efficient ways to strengthen European industrial resilience and reduce dependences is to diversify supply chains. Another way to strengthen European industrial resilience and reduce dependences is by enhancing the EU’s manufacturing capabilities in key strategic technologies, such as solar and wind energy, heat pumps, electricity grids, batteries, long-duration energy storage, electrolyser manufacturing for renewable hydrogen and pre-fabricated sustainable building materials.

We believe there is also a need to strengthen ‘Made in EU’ and accelerate the adoption of Industry 4.0 technologies, particularly by SMEs. Parliament would like to see the ‘Made in Europe’ partnership in the Horizon Europe programme and to do so by fostering SMEs’ cooperation with universities and research and technology organisations.

‘Made in Europe’ should stand not only for quality and innovation, but also for highly sustainable industrial products, processes and services, and promote the recovery of quality employment and manufacturing opportunities throughout the Union, in order to support the balanced and sustainable development of all EU regions.

We are not alone on this road. We will work together with like-minded partners, such as Japan, the United States, South Korea and others, aligning partners’ interests with EU interests, to diversify and integrate sustainable supply and value chains.

We need to maintain our open strategic autonomy in an increasingly challenging geo-political environment.