Speech by President von der Leyen at the plenary session of the European Parliament on the preparation of the European Council meeting of 15 December 2022

Madam President, dear Roberta,

Minister,

Ladies and Gentlemen,

Exactly three years ago, I stood here in front of Parliament and presented the European Green Deal. Europe was the first continent to lead the way towards climate neutrality. Other countries had commitments, but we had a plan. At the time, we were worried about our industry because of unfair competition from heavy polluters. Now, only three years later, the competition we face has changed dramatically. The world is in a race for clean technologies. This is what we wanted, what we need. Because only when the most advanced economies compete to build a net-zero future will we achieve our common goals of limiting global warming and protecting our children’s future.

However, this new competitive environment also forces us to rethink on our side the way in which we support our industry in its transition to green energy and how we reinforce its global preeminence. This is what we will discuss tomorrow at the European Council. And that’s what I want to focus on today. Let’s start by analyzing the difficult situation in which our companies find themselves at the present time. Global gas supplies remain tight due to Russia’s war of aggression. Russia has cut its pipeline gas supply to the European Union by 80% in the past eight months. But we were able to compensate. We have diversified our supply, we are saving energy. We have stimulated the deployment of renewable energies. We skim superprofits from energy-producing companies in order to use these monies to support vulnerable homes and businesses. We have decided to group our gas purchases. And we proposed a market correction mechanism to limit the gas price spike. Our reserves are filled. As a result, we will be sheltered this winter. It seems to me that we can all be very proud of what we have achieved, despite the blackmail exercised by Russia. And I would like to take this opportunity to thank the Czech Presidency for what it has managed to achieve over the past six months. It’s wonderful and I want to thank you from the bottom of my heart.

But everything we have done has a cost. The supply of cheap Russian energy was part of the business model of many European industries. This model was shattered following Russia’s attack on Ukraine. And unfortunately we have to face the facts: this model will not return. As the International Energy Agency has just reminded us, for lack of Russian gas, Europe will now import its fossil fuels at structurally higher prices. For our SMEs and our industry, the only sustainable way out is therefore to focus on renewable energies. Renewable energy is not only affordable, but also produced locally. And they create quality jobs in Europe.

This transition will not happen overnight, however, and global competition is intensifying. Take the case of the United States. They recently approved a major investment plan, dubbed the “Cutting Inflation Act,” which also sets standards for cleantech sectors. Let’s be clear: above all, it is good to support the transition to clean energy, provided it is done correctly, transparently, in a spirit of cooperation and in a way that guarantees a level playing field. It should be a race against time, not a race against each other. Leveling up, not down.

However, the law on the reduction of inflation risks leading to unfair competition. Three aspects are of particular concern: first, the “buy American” logic, which underlies much of this law. Second, tax breaks, which could lead to discrimination. Finally, thirdly, production subsidies, which could disadvantage European companies. We have to solve these problems. We have to come up with our own answer, our European version of the ‘Inflation Reduction Act’. And I envisage four major lines of action. First, we need to adapt our own rules to facilitate domestic public investment in the transition. Second, we need to reassess the need to increase European public investment in the transition. Third, we must work with the United States to address some of the most concerning aspects of this law. And, of course, fourth: we must further accelerate our transition to green energy.

Let’s start with my first point: we must lay the foundations for the industrial production of tomorrow, our own base of non-polluting technologies for industry. We need to strengthen it. We must ensure that investment aid and tax credits reach the sectors concerned more easily and more quickly. This is why we will present in January a new framework to accelerate the transition. This framework will simplify our state aid rules and speed up their application for years to come. It will also fill existing gaps to target the entire value chain of strategic green sectors, including large-scale deployment and access to raw materials. This new framework will allow Member States, for example, to take into account global conditions – and not only European conditions – when granting aid for a certain type of product in the field of clean technologies. This means that, for certain greenfield investments, Member States can match third country subsidies. This will encourage companies to continue their investments in Europe and not to invest in the United States, but to settle here, stay here and invest in the European Union.

At the same time, we must protect our single market against fragmentation and uncoordinated reactions. In other words, our unity as a single market, at 27. And, as we all know, Member States do not have the same capacity for large-scale investment in strategic sectors – not everyone has large financial reserves. This brings me to my second point. We need a fair ecological transition across Europe. To promote clean technologies across Europe, we therefore need additional European funding. And, on this point, REPowerEU is our tool of choice. REPowerEU is the instrument that helps SMEs and industries switch to cheaper and cleaner energy. And, in this respect, I really want to congratulate you, and I am very happy that this instrument was adopted this morning, or rather very late last night. It will enter into force at the beginning of next year. It’s a big step forward. Be thanked for it. It is a great accomplishment right here in Parliament. We can be proud to now have REPowerEU. Furthermore, I believe that the accelerated switch to renewable energy will also require REPowerEU to be stimulated, so that we can provide an adequate response to the situation created by the US Inflation Reduction Act. That’s for the short term.

However, in the medium term, I believe that we need a more structural solution. Because we want European industry to continue to play a leading role in the transition to green energy. This is why I introduced the idea of ​​a sovereignty fund. I think that the next mid-term review of the MFF towards the summer will be a good opportunity to present our proposal in more detailed terms. The underlying idea is very simple: the European continent is full of assets. Our single market is exceptional. We have the largest single market in the world, we have a highly skilled workforce, world-class universities; we have a very dense network of renowned research institutes. But we must also mobilize our strong European industrial power in the global fight against climate change. To do this, we need a common European industrial policy, with common European funding. By this I mean that we need to consolidate the resources available for upstream research, innovation and strategic projects at Union level. Just think of hydrogen, semiconductors, quantum computing, artificial intelligence and biotechnology — that’s where we need to invest now. For the first time, we will also provide European funding for the selected important projects of common European interest. These are strategic investments designed to maintain our role as a global leader in the clean technology sector.

Coming to my third point: We are working closely with the Biden administration on the most concerning aspects of the Inflation Reduction Act. And we are exploring how to jointly strengthen our clean energy industrial base. But we must ensure in these discussions that our respective incentive programs are mutually reinforcing and that neither is applied to the detriment of the other. Consider, for example, the issue of critical raw materials needed for clean technologies. Today, the production and processing—we are all aware of this—of some of the most urgently needed critical raw materials are controlled by a single country, namely, China. We therefore share the concern of the United States about this strategic vulnerability, which is indeed ours.

One of the possible solutions to overcome this undoubted monopoly of China would consist, for example, in creating a raw materials club with the United States and with other partners. And we are ready to work hard on all these fronts to obtain this type of community of forces and consolidate our industrial base.

Finally, remember, all these actions serve to build a bridge. The very one that will enable our cleantech industry to transform from the expensive fossil fuels of today to renewables that are clean and affordable. Also, now is when we need this investment because now is when these industries and our SMEs need to be supported, until we have developed an energy environment that is affordable, that is clean and safe.

Ladies and Gentlemen,

Let’s never lose sight of the bigger picture. A war is raging on the borders of our Union. Russia is stepping up its attacks on civilians and civilian infrastructure. And the courageous Ukrainian people need our full support. This is therefore not the time for a trade war with our closest partner and ally. The time has come for our democracies to unite their forces even more, to act for Ukraine. I am very happy to see that we have now agreed on the next round of our €18 billion financial envelope, which will reach Ukraine at the beginning of January. Putin’s war of aggression will fail mainly for two reasons. The first is, of course, the immense bravery and immense courage of the Ukrainian people. But the second reason is the remarkable unity of the international community. So let’s stay strong, let’s act for Ukraine, let’s be united.

Slava Ukrainian.

Merry Christmas and long life to Europe.

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Speech by President von der Leyen at the plenary session of the European Parliament on the preparation of the European Council meeting of 15 December 2022


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