Speech by President von der Leyen at the European Parliament Plenary on the preparation of the European Council meeting of 23-24 March 2023
Brussels, 15 March 2023
"Check against delivery"
President Metsola, dear Roberta,
President Michel, dear Charles,
Honourable Members,
Last Friday, I met with President Biden in Washington. We had a very good discussion on the IRA. There is a striking symmetry between the Inflation Reduction Act and the European Green Deal. Both of them are simultaneously a climate strategy and a strategy for investment and growth. Both of them include funding for a just transition. And both include regulatory standards. Only on carbon pricing, the US system is still much more limited than ours. In other words, the two biggest and most advanced economies in the world are now moving in the same direction. Therefore, I welcome the IRA for its massive investment in clean tech.
But as I told you in November, some aspects of the IRA were of concern to us and needed solutions. Now I am happy to report that we have found solutions. On Friday, President Biden and I confirmed the understanding on EVs that allows European carmakers to get access to US tax breaks. We launched discussions on a critical raw materials agreement. The aim is to ensure that critical raw materials for electric vehicle batteries, extracted or processed in the EU, are treated in the same way as if they came from the US. This will secure strong supply chains for batteries in Europe and ensure access to the US market. And we started a transparency dialogue on incentives for the clean-tech industry.
That is good news. But let me be clear: Negotiations can only solve some of the most concerning issues. The big bulk of work still lies with us in Europe. We Europeans need to get better at nurturing our own clean-tech industry. We need to speed up and simplify procedures. And we need to grant better access to public and private finance.
Let me give you three figures that underscore why. Global investment in the clean transition topped USD 1 trillion dollars last year. That is 30% more than the year before. And this global market for net-zero technologies is set to triple by 2030. In other words: the race is on. We must get our act together if we want to stay front-runners. We must nurture our own clean-tech industrial base, both to create new jobs here in Europe and to ensure access to the clean solutions we so urgently need. And that is what the Green Deal Industrial Plan is all about.
The centrepieces of the Green Deal Industrial Plan are the Net-Zero Industry Act and the Critical Raw Materials Act. The Commission is proposing both this week. With the Net-Zero Industry Act, we are setting the ambition. By 2030, we want to be able to produce at least 40% of the clean tech needed. We are facilitating permitting. We are working with regulatory sandboxes. We are creating simpler state aid schemes. And we are allowing for tax breaks and the flexible use of EU funds. In short, the Net-Zero Industry Act provides speed, simplification, plus funding.
The second centrepiece is the Critical Raw Materials Act, which the College will adopt tomorrow. It is about securing the supply for critical materials which are badly needed for the digital and green transition. These minerals power phones and electric vehicles, chips and batteries, solar panels and wind turbines. They cannot function without critical raw materials. And the demand for critical raw materials will dramatically rise over the next several years and decades. As you all know, today the EU depends heavily on a few third countries for these strategic raw materials. We get 98% of our rare earth supply and 93% of our magnesium from China. The pandemic and the war have taught us a lesson about dependencies: If we want to be independent, we urgently have to strengthen and diversify our supply chains with like-minded partners. Last week, I was in Canada, where European companies are doing just that. For instance, sourcing low-carbon nickel to produce batteries here in Europe. Canada is not only a reliable partner. It also shares our values and guarantees that raw materials are mined with the highest standards, for the environment and for workers.
The Critical Raw Materials Act will support these efforts by European companies. We want to extract more ores and minerals in Europe. We want to boost our processing capacity to at least 40% of annual consumption. And of course, we need to recycle more. Again, back to Canada. I visited a company that is able to recycle 95% of lithium, cobalt and nickel from batteries. 95% recycled. That is the future.
So, ladies and gentlemen, that is our support for clean tech companies. But the issue of competitiveness is much broader. It concerns our internal market. And that is precisely the subject of the two communications that we will also publish tomorrow. Our Single Market is the basis of our prosperity and our competitiveness. It turns 30 years old this year. But the potential of the Single Market is still far from having been exhausted. Studies show that if we deepen it further, we can release up to EUR 700 billion. That does not start in the capital markets or end in R & D. Basic research, development and marketability – that is the magic triangle of our success. Here, in Europe, we developed the new mRNA vaccines that helped us overcome the pandemic. And between 2011 and 2020 nowhere in the world were more patents filed in the field of hydrogen – a key area for the future – than in Europe. These are just two examples showing the potential that Europe has. We must build on that potential.
We Europeans have set ourselves the target of spending 3% of our GDP on R & D by 2030. Slowly but surely, we are getting closer to that target. But that is not enough. Others are quicker and better. While the amount we spend on R & D is slowly rising, our share of global R & D expenditure has fallen from 41% to 31% over the last 20 years.
Together with the Swedish Presidency of the Council, I would therefore like to propose to the Heads of State or Government that we increase Europe's common target for research spending. This is not only necessary for Europe's researchers, scientists and businesses. It is also a strong signal of how serious we are about strengthening our competitiveness. My second point is about red tape. It is Europe's companies and employees that make the Single Market one of the world's most attractive economic regions. Whether it be industrial giants and global market leaders or medium-sized enterprises and family firms – their success is Europe's success. We should therefore do everything we can to make their work easier. We know that the quality of public administration and of the legal framework is key to their competitiveness. That is why we use comprehensive impact assessments to try and ensure that EU laws do not burden EU businesses but support them. However, often it is not an individual obligation to provide proof or individual condition that makes life difficult for them. It is the sum of all such requirements. We will therefore look beyond departmental boundaries to see what really makes Europe more competitive and what we can do without. By the autumn we will put forward concrete proposals to simplify reporting requirements and reduce them overall by 25%.
Our political priorities – the European Green Deal, digitalisation and geopolitical resilience – remain unchanged. They have proved to be the right priorities, but we want to make them less costly to implement, especially for our small and medium-sized businesses. In rolling out renewables, we have shown the momentum we can create through targeted legislation for faster and more flexible authorisation procedures. In future, this should be the rule, not the exception. Europe's Single Market is strong. We must do our utmost to preserve and consolidate its strength. In future we will be guided by a series of key performance indicators, which will tell us whether Europe's economy is really becoming more competitive. How is the share of private investment evolving? How do things stand with the digitalisation of Europe's businesses? How many adults are enrolled in continuing vocational training? All these data are available. We can make an objective assessment of whether and how we are moving forward. The Commission will therefore report to Parliament once a year on developments in these key figures.
With a war on our doorstep, volatile energy prices, and massive clean-tech investments, Europe has to up its game. Here is our proposal.
Long live Europe.
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