DAVOS: The EU chief announced ambitious plans on Tuesday to challenge China and the United States in the race for clean-tech industries, as a battle over green trade emerged at the World Economic Forum.

European Commission President Ursula von der Leyen slammed what she described as “aggressive attempts” to lure Europe’s clean-tech industrial capacities to China and other countries.

“China heavily subsidies its industry and restricts access to its market for EU companies,” she told the world’s global political and business elite at the annual meeting in the Swiss Alpine village of Davos. “We will not hesitate to open investigations if we consider that our procurement or other markets are being distorted by such subsidies.”

She also renewed European concerns over the US Inflation Reduction Act, a climate subsidy package worth around $370 billion, though she said both sides have been working to find “solutions” that could include allowing EU-made electric cars to benefit from the act.

“Our aim should be to avoid disruptions in transatlantic trade and investment. We should work towards ensuring that our respective incentive programmes are fair and mutually reinforcing,” she said.

The week-long forum is taking place under the theme of “cooperation in a fragmented world” as the planet faces a perfect storm of crises — Russia’s invasion of Ukraine, soaring inflation, the spectre of recession and climate catastrophes.

But tensions between world powers still emerged at the meetings in Davos.

‘Cold War mentality’

Speaking after von der Leyen, Chinese Vice Premier Liu He called for an end to “Cold War mentality” and repeated Beijing’s opposition to “unilateralism and protectionism”.

At a separate panel discussion, US climate envoy John Kerry said countries complaining about the Inflation Reduction Act should instead try to imitate the United States.

“The reaction of other countries shouldn’t be, ‘oh my god, you shouldn’t be doing that, that’s putting us in an unfair position’. Do it, too,” he said.

“Everybody’s got to do the same thing to accelerate this process even more,” Kerry added. Von der Leyen announced projects to step up European efforts to build clean energies key to the world’s aspirational goal of limiting global warming to 1.5 degrees Celsius.

The plans include a “sovereignty fund” to boost research, innovation and strategic industrial projects in efforts to achieve net-zero emissions.

She also said a “Net Zero Industry Act” would be proposed to focus investment on strategic projects along the entire supply chain.

“Those who develop and manufacture the technology that will be the foundation of tomorrow’s economy will have the greatest competitive edge,” she said.

“To get ahead of the competition we need to keep investing in strengthening our industrial base and making Europe more investment and innovation friendly,” the EU chief added.

But she also called for cooperation between “like-minder partners”, from the United States to Ukraine, to form a “critical raw materials club” in order to slash Europe’s dependence on China for the rare earths that are needed to make clean technology such as electric car batteries.

Published in Dawn, January 18th, 2023