L R AS Published on Sunday 26 March 2023 - n° 438 - Categories:Europe
Deloitte is asked for its opinion on European policy. It does not answer!
A German climate organisation has asked Deloitte to analyse the European Union's Green Deal Industrial Plan and the Net Zero Industry Act it contains in the light of the US IRA.
For Deloitte, "Europe should not engage in a "subsidy race" but should find its "own way to a smart and efficient industrial policy,"
and use "smart subsidy instruments" such as auctions and Contracts for Difference (CfD) as opposed to "nominally fixed benefits" such as tax credits used by the US.
The study stresses that the EU needs to step up the pace considerably in the area of "key climate-neutral technologies" in order to meet its targets.
At the current rate of new electricity generation capacity, the targets set out in the "REPowerEU" strategy for 2030 would not be met at 258 gigawatts for solar and 231 gigawatts for wind.
If 40% of the EU's demand for key climate-neutral technologies is to be met from domestic production, the annual production capacity of photovoltaics needs to be increased sixfold compared to the current level.
As for electrolyser or battery production, the currently announced plans to build new production capacity are sufficient to "meet or exceed a good part of the demand". However, there is "a lot of uncertainty" as to whether the announced projects "will be suspended or withdrawn due to IRA subsidies and the lack of corresponding incentives in the EU."
https://klimawirtschaft.org/wp-content/uploads/2023/03/Deloitte-EU-Green-Industrial-Policy-Study.pdf
Photon of 24 March 2023
Editor's note: Deloitte is asked for an opinion. It doesn't really answer the question and recommends finding its own way for an industrial policy! What would that be? In what way? The only certainty is that the pace of solar and wind power installations is not sufficient.
The only certainty is that the pace of solar and wind power installations is not sufficient.However, the American process of compensation for industrial or installation projects stimulates initiatives (the reward comes after the project is completed), whereas it is not perceived that auctions or CfD contracts would have the same effect (the compensation comes at the start of the contract).
