EU, US energy chiefs keep clean tech rivalry on friendly terms in Bucharest

The European energy commissioner and the US energy secretary used a meeting of Central and Eastern European energy ministers in Bucharest this week to keep EU-US clean tech competition on a friendly footing.

In recent years both the EU and the US have pinpointed climate-friendly technology like wind turbines, solar panels and batteries, as key to their security and prosperity. While the move was spurred by China’s increasingly visible dominance in clean tech and Russia’s halting of gas supplies, it has also led to tension between the two global blocs.

The US’ Inflation Reduction Act (IRA) in 2022 particularly irked the European Commission. The Commission considered the Act, which provides subsidies for the manufacture on US soil of clean energy technology, to be protectionist, although the blocs have since worked to settle their differences.

The fifth meeting of the Partnership for Transatlantic Energy and Climate Cooperation (P-TECC), in Bucharest on Wednesday 24 July was an opportunity for both sides to keep their rivalry on friendly terms.

“Always a pleasure to meet my dear friend,” European Energy Commissioner Kadri Simson tweeted after meeting US Energy Secretary Jennifer Granholm, noting that “we have enjoyed a very good cooperation” during “difficult times.”

Granholm returned the favour, expressing pleasure to engage with “my dear EU counterpart”.

Granholm made a point of emphasising the IRA’s positives for other countries, noting that “of all the announcements and investments in clean energy manufacturing in the United States between 2021 and 2023, more than half involved foreign companies or joint ventures.”

She also expressed an interest in an exchange with Europe on the development of geothermal energy.

The rapprochement has been helped by sharing a common enemy.

The P-TECC meeting also brought together 24 Central and Eastern European countries, including Ukraine, Moldova, and Georgia, who will be very aware of the link between energy supplies and geopolitics.

Tweeting after the meeting, Simson hailed the trans-Atlanic cooperation and cited the successful phasing out of Russian fossil fuels as “a good example of our joint work.”

Alternate industrial strategies

While both the US and the EU are promoting clean technologies, their industrial policies differ.

The US’ tax incentives-led approach has led to the opening of 785 factories, according to Granholm.

In contrast, the EU has struggled to finance its industrial ambitions. Commission President Ursula von der Leyen’s proposal to create a ‘Sovereignty Fund’, which would provide cash for the continent’s industrial ambitions, did not secure sufficient support from EU countries.

The 27 EU member states are divided on the need for a greater European budget and differ on whether the EU should borrow money on the markets. Also, some countries are likely to benefit more than others from any industrial policy, further complicating discussions.

Deprived of funding, the EU’s signature industrial policy, the Net-Zero Industry Act, will do little to promote clean energy manufacturing, according to experts, but von der Leyen has not given up.

In her recent re-election pitch to the European Parliament, she proposed a ‘Clean industrial Pact’ in the first 100 days of her new term, which would be funded via a new ‘Industrial Decarbonisation Accelerator’ and ‘Competitiveness Fund’. However, it remains unclear where any new public money would ultimately be sourced from.

Private funding is also a challenge as the EU has not yet completed the Capital Markets Union, which would allow greater flows of private money within the bloc. To address this, von der Leyen also proposed a ‘Savings and Investment Union’ in her speech.

EU-US tensions ahead?

Bucharest was likely the last meeting between Simpson and Granholm in their current roles. Simson has not been renominated by Estonia for the next European Commission, and a new US administration will be appointed after the US presidential elections in November.

However, irrespective of these two personalities, the EU-US dynamic in energy and climate may face a wider shift in the coming months, depending on the outcome of the November elections.

While Republican candidate Donald Trump does not share the current administration’s enthusiasm for clean energy technologies, he is advocating for a more protectionist trade policy, which could reignite tensions with Europe.

He is also less committed to the defence of Ukraine – a common goal that has done much to bring Europe and the US closer together over the past two years.

The prospective Democratic candidate, the incumbent Vice President Kamala Harris, has a pro-environment stance that is more in line with Europe’s Green Deal. However, her focus on securing clean tech jobs for American communities may clash with the interests of Europeans, who equally want to see the spoils of the energy transition.

[Edited by Donagh Cagney/Zoran Radosavljevic]

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