By Maha El Dahan and Jan Strupczewski

The European Union responded on Tuesday to US moves to boost its energy transition with plans to make life easier for the bloc’s green industry, saying it would mobilise state aid and a fund to keep firms from moving to the United States.

European Commission head Ursula von der Leyen told the World Economic Forum (WEF) annual meeting in Davos that the moves would be part of the EU’s Green Deal industrial plan to make Europe a centre for clean technology and innovation.

“To help make this happen, we will put forward a new Net-Zero Industry Act,” she said. “The aim will be to focus investment on strategic projects along the entire supply chain. We will especially look at how to simplify and fast-track permitting for new clean tech production sites,” she said.

“To keep European industry attractive, there is a need to be competitive with the offers and incentives that are currently available outside the EU,” von der Leyen added.

Earlier, International Energy Agency (IEA) executive director Fatih Birol told a WEF panel that energy security was now the biggest driver of climate investment, as countries seek to ensure their supplies.

Birol said the US Inflation Reduction Act (IRA), which was signed by President Joe Biden last year, would drive investment into cleaner energy and represented the most important climate deal since the landmark 2015 Paris Agreement.

‘MONEY, MONEY, MONEY’

US climate envoy John Kerry told a separate panel on financing the transition to a low carbon economy that the only way to avoid catastrophic damage caused by climate change was for governments and companies to spend big.

“How do we get there? The lesson I have learned in the last years … is money, money, money, money, money, money, money,” Kerry said of what was needed for the world to stand any chance of meeting the Paris agreement goal of limiting global warming to 1.5 degrees Celsius above pre-industrial levels.

While European countries have welcomed the new commitment to energy transition by Biden’s administration, some have said they fear it may disadvantage their companies.

“I understand the importance of the act from a US perspective but on the other side I should also think about European interests,” Jozef Sikela, the Czech minister of industry and trade, said on the same WEF panel as Birol.

Sikela said European households and industries were paying the biggest bill for the global energy crisis, while the new US legislation would pull away investors and force governments to compete on the level of subsidies.

“When we start a rally of subsidies, this is dangerous,” he said, adding that Europe should be lobbying for exemptions.

‘TARGETED SUPPORT’

Europe’s energy crisis, triggered by Russia’s invasion of Ukraine 11 months ago, has been felt across the 27-member EU, with gas prices almost 90 per cent higher last year than the year before.

Von der Leyen did not give any details of the proposed fund, an idea she first raised in September, which does not yet have the support of all EU governments, notably Germany.

“As this will take some time, we will look at a bridging solution to provide fast and targeted support where it is most needed,” she said, without giving any details, adding that the Commission was pinning down the needs of the green industry.

Vicki Hollub, chief executive of US oil producer Occidental Petroleum Corp, earlier called the US legislation one of the most transformative bills ever signed.

But she rounded on European governments for taxing fossil fuel firms that were also developing renewable energy.

“With all due respect to Europe, I hate to say it, but I have to say it, imposing windfall profit tax on the oil companies that are doing their best to grow wind and solar in Europe was not the smartest move, in my opinion,” Hollub said.

Subsidies are very important for the development of new technologies, she told the WEF panel with Birol and Sikela.