Europe shying from cutting off Chinese imports

The European Union is shying away from further measures to protect its embattled clean-tech industry from cheap Chinese imports over concerns it could make it harder to source key components and raise the cost of the green transition.

Negotiators are set to conclude talks Tuesday on the Net Zero Industry Act — the EU’s answer to the US’s Inflation Reduction Act — that aims to ensure that the region’s energy transition isn’t accompanied by a mass flight of the critical industries needed to power it. But Europe’s wind and solar sectors are coming under increasing pressure, prompting calls for trade defense measures, such as the bloc’s probe of Chinese electric vehicles.

The dilemma is that EU industry doesn’t want to risk cutting off supplies of crucial parts for solar panels and wind turbines, despite enormous Chinese state subsidies in China distorting the market. Eurelectric, the industry’s power lobby, expressed concerns last week that new trade measures were being considered. The European Commission, meanwhile, knows that a potential trade war could raise the cost of meeting its net-zero climate targets.

“The EU also has instruments to tackle unfair trade practices such as dumping,” Mairead McGuinness, financial services commissioner, told parliament Monday. “Given that we currently rely to a very important degree on imports to reach EU solar deployment targets, any potential measure needs to be weighed against the objectives we have set ourselves when it comes to the energy transition.”

The new EU legislation comes as Europe’s solar industry faces its deepest crisis in more than a decade, even as it installs record numbers of panels. Last month, Swiss panel maker Meyer Burger Technology AG said it may shut a production site in Freiberg, Germany — one of Europe’s largest — and redirect investments to the US.

The NZIA has been designed to halt that erosion of industrial capacity by speeding up permitting and weighting auctions for new renewables capacity in favor of domestic producers on grounds of cyber security and sustainability. But the absence of fresh financing has raised concerns the measure will lack teeth when compared with the billions of dollars on offer from the US.

“The EU should endorse domestic solar manufacturing with direct support measures,” Kristian Ruby, Eurelectric’s secretary general, wrote in a letter to President Ursula von der Leyen and other EU commissioners on Friday. Trade measures “could significantly delay the adoption of clean electrification.”

SIDBI MSME Conclave 2024 |Register Now.

Harry Byrne

Related post