As a strategy paper, it is a leap forward for the EU: unlike the 2023 Green Deal Industrial Plan, the CID has a sharp problem analysis and identifies the right levers to tackle the sectors' problems. But being a high-level strategy, it lacks specifics regarding scope & heft of instruments. (3/n)
As a result, the success of the CID hinges on how the many blanks for instruments like lead markets are filled in in COM proposals, and then by co-legislators, over the next 1-2 years. The chart shows how previous EU sectoral policy relates to the CID, and what legislation to expect: (4/n)
The chart on EU sectoral policy and CID outlines crucial steps for future legislation. It’s clear that much depends on filling gaps in lead markets. What do you think will be the biggest challenge in this process?
The CID implementation needs to be very bold, given the massive challenges of the sectors. On clean tech, Chinese products are often MUCH cheaper. And EU-based producers continue to lose market share in the EU and globally. The chart shows the recent developments (higher quality in PDF): (5/n)
On clean tech, the CID only offers an action plan for automotives. Like the CID, it's a decent strategy, but does not commit the EU to game changing measures yet - i.e. level of actual ambition is still an open question. (6/n)
Beyond the transport value chain, there are no sector-specific strategies for clean tech; nothing to tackle the sector-specific bottlenecks for wind turbines, heat pumps, or electrolyzers, for instance. (7/n)
That means many strategic questions for clean tech still remain unanswered. The extent to which clean tech will be covered in upcoming legislation, like the IDAA, also is open. Overall, it's unclear which EU policy is supposed to help turn the tide for clean tech (8/n)
On energy-intensive industries, the CID again provides sharp analysis on high energy prices, challenging international markets, and decarbonisation costs. In March, two action plans, for metals&steel, and affordable energy, were published. (9/n)
But both action plans are rehashing, for the most part, policy measures that were already on the EU agenda before (like expanding renewables quickly) - and unless they are implemented with much more vigor than before, it's doubtful they will now bring about a sea change (10/n)
One exception to this, and a promising tool, is lead markets. But their scope remains unspecified so far, to be spelt out in the IDAA. To make a noticable difference, lead markets must go beyond what the NZIA has done for clean tech - but the action plan says NZIA will be the model. (11/n)
So, what's needed to ensure the CID is actually turned into hard-edged policy? The brief gives four recommendations (12/n)
1️⃣Implementing proposed instruments forcefully. As the CID remains vague, it will be crucial that the EU is bold when deciding the specifics of its industrial policy tools. In the paper, I illustrate this with lead markets, state aid rules (opex subsidies!) and EV purchasing schemes. (13/n)