The EU Parliament has adopted the EU’s Strategic Technologies for Europe Platform (STEP) – a stripped down version of the previously touted European Sovereignty Fund – as part of the bloc’s response to the US Inflation Reduction Act (IRA). Lawmakers called on the EU to bolster the additional funds available to the total of €13 bn in support of green projects. While this falls short of what is needed to compete with the more than €300 bn available for US businesses, Transport & Environment (T&E) has called on national governments to back the STEP and to commit themselves to fresh funds.
So far, subsidies for green manufacturing have come at the national level with little strings attached. This has created a two-tier Europe, which has divided France and Germany from the rest. STEP addresses this by providing additional financial firepower to programmes across Europe; the Innovation Fund and the InvestEU.
However, aside from the sums being too small, the package lacks focus. The inclusion of biotech and digital technologies’ will stretch the funds too thin, says T&E. The limited funds should be spent on accelerating Europe’s green transition, notably on critical minerals supply chains and batteries, says the group.
Xavier Sol, sustainable finance director at T&E, said: “This is a welcome first pan-European response to the global cleantech race. But the sums on the table are not enough to compete with the gigantic subsidies being doled out by the Americans and the Chinese. The creation of STEP only makes sense if this becomes a building block towards a much larger climate investment plan”.
Notes to editor
The Innovation Fund, with its revenues stemming from the EU carbon market, is an increasingly important climate financier across Europe, providing mostly grants to clean tech projects. The InvestEU programme enables public banks to tap into funds in support of strategic projects.