Energy and Climate Futures: Green Industrial Policies In a Fragmented World

Energy and climate futures: Green industrial policies in a fragmented world

ANNUAL EVENT OF THE SPANISH COMMITTEE OF THE WORLD ENERGY COUNCIL (CECME). November 7th 2023, 9:30 AM

The imperative to reduce industrial greenhouse gas (GHG) emissions, a renewed global competition and the restructuring of value chains
have brought industrial policy to the forefront of the political agenda. Decarbonising the industrial sector is key for the energy transition,
given that industrial fuel combustion, processes, product use and energy consumption amount roughly to one third of global GHG emissions,
and have increased by approximately 70% since 2000. Decarbonising industrial emissions poses a significant challenge due to
fierce international competition and technical complexities, the need for supportive policies with a direct influence on trade, climate
negotiations and global geopolitics. In this context, the EU’s challenge is to make transition to sustainable energy systems while at the
same time promoting economic growth by seizing the new green industrial opportunities in an international environment where cooperation
mechanisms are experiencing greater tensions.

Against the backdrop of energy security concerns and high economic uncertainty for Europe, rising energy cost disadvantages, geostrategic
instability and competing policy options – like the US Inflation Reduction Act (IRA) – the future of the EU’s industry is firmly back on
the Brussels agenda. In 2023, the European Commission presented the Green Deal Industrial Plan and the Net Zero Industry Act, reshaping
the EU's efforts to become a global leader in clean technologies. As an example of this new political landscape, Brussels is deploying
new instruments such as the Carbon Border Adjustment Mechanism, the Next Generation EU Funds and the EU Innovation Fund.
Meanwhile, the IRA and the US Infrastructure Investment and Jobs Act (IIAJ) provide multi-billion dollars grants to decarbonise industry
and develop manufacturing of low-carbon technologies. Despite the tensions in transatlantic relations, there is consensus on reconfiguring
the trade relationship with China, despite hesitation between opting for de-risking over de-coupling, to curb the dependency on certain
strategic goods and protect intellectual property.

The new political landscape opens up many geopolitical, energy and climate uncertainties that will be addressed during the event. These
will include, among many others: How compatible are decarbonisation efforts, multilateralism and open-strategic autonomy? What is the
future of the EU-US and EU-China relations? Is the EU ready for the industrial dimension of the Green Deal and global systemic rivalries?
What are the expected impacts of these policies on industries at both sides of the Atlantic, and on climate negotiations during COP28
and beyond? What will be the effect of the international goals that are being proposed by IEA, EC and G20 (such as tripling the renewables
deployment or doubling energy efficiency)?

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