Strategic Technologies for Europe Platform (STEP)
On Wednesday, February 7, legislators from the European Council and the European Parliament reached an agreement on Strategic Technologies for Europe Platform (STEP), a plan to foster investment in green technologies. STEP aims to strengthen the European Union’s competitiveness in critical technologies through a series of investment incentives. This program specifically focuses on development in what pertains to the areas of deep tech, cleantech and biotech, as a means to develop sustainable energy production and eco-friendly technologies. [1] Easing the flow of financial support to business investments in these key sectors is foreseen as the main objective of the measures. The initiative is expected to provide €2.63 billion in funding as part of the European Innovation Council (EIC) accelerator. [2] Not only could STEP become a means of providing equity-financing for European companies but is also seen as a potential driver to keep Europe ahead of other states in the development of green technologies.
The initiative has been flagged by the President of the European Commission, Ursula von der Leyen, as a funnel through which funds can be directed to the development of green technology. This would contribute towards the implementation of the European Green Deal by cementing European presence in the clean energy economy. Ultimately, this project would aim to keep the EU in sync with efforts made by China and the U.S. related to investment in green energy production.[3] More recently, however, it appears that an increasingly large sum will be allocated to European defense resources, which require more funding. Another factor for the reduction in the budget for STEP is the palpable reluctance of EU Member States to create a new fund for strategic investment. This is especially true when the fact that funds from Recovery and Resilience Facility (RRF) may be used to support such projects is considered.[4]
The joint committees responsible for the dossier are the committee responsible for Industry Research and Energy (ITRE) and that for Budgets (BUDG). Heading each of these as rapporteurs are the MEPs José Manuel Fernandes and Christian Ehler, respectively, both members for the European People’s Party (EPP).[5] In terms of concrete policies to be put in place, the file follows the guidelines set out in the Net Zero Industrial Act (NZIA). [6] This regulation will be the blueprint for the implementation of the Green Deal Industrial Plan, and will include a combination of the following measures:
- accelerating permit-granting procedures
- developing ‘net zero acceleration valleys’
- a framework for green-tech procurement
- new rules for public auctions of renewable energy projects.
Although steps are being taken towards making Europe strategically competitive in the development of cleantech, the objectives of the STEP project are nothing short of ambitious. With a budget of €10 billion, the prospects of the project are, to say the least, modest when compared with the spending power of states such as China and the United States. It is reported that the U.S. deploys $400 billion in spending and tax credits to foster the growth of its clean energy industry.[7] Meanwhile, in China, the estimate of the total investment amount in the sector in 2023 is at a whooping $890 billion.[8] Before these comparatively colossal investments, and speaking strictly in terms of the funding available, Europe is faced with a challenge in fostering the growth of competitive businesses in the region. The budget reduction for STEP means that the region may be in for a less smooth energy transition.
The overall effectiveness of the STEP project, and the fulfilment of its objectives is still to be seen in the coming weeks. Only time will tell whether Europe can carry out its energy transition with the current challenges being faced. The Parliament is due to discuss the provisional institutional agreement regarding the STEP in its second plenary session of this month (February 27).[9] As foreseen by the regulation, a specific committee made up of Commission experts would be set up for keeping track of the STEP implementation. This committee would be responsible for awarding and promoting the sovereignty seal, setting up and managing the sovereignty portal, and liaising with other structures. Examples of these include the critical raw-materials board and the net-zero Europe Platform.[10] In the meantime, the STEP initiative seems to be at the forefront of these efforts with a budget that, despite its comparatively negligible scale, is nonetheless a move towards a tangible goal.
[1] https://www.euractiv.com/section/energy-environment/news/eu-closes-deal-on-scaled-back-clean-tech-sovereignty-fund/
[2] https://www.ideal-ist.eu/news/strategic-technologies-europe-platform-step-ease-financial-support-business-investments
[3] https://www.politico.eu/article/eu-ursula-von-der-leyen-empty-green-davos-promise-tech-climate-change/
[4] https://sciencebusiness.net/news/industry/eus-plan-critical-technologies-ends-shadow-promised-sovereignty-fund
[5] https://oeil.secure.europarl.europa.eu/oeil/popups/ficheprocedure.do?reference=2023/0199(COD)&l=en
[6] https://news.pwc.be/net-zero-industrial-act-and-the-strategic-technologies-for-europe-platform-forging-a-synergy-for-the-european-industry-of-the-future/
[7] https://www.nytimes.com/2023/12/07/business/economy/clean-energy-us-europe.html
[8] https://www.carbonbrief.org/analysis-clean-energy-was-top-driver-of-chinas-economic-growth-in-2023/
[9] https://www.europarl.europa.eu/sedcms/documents/PRIORITY_INFO/1251/SYN_POJ_February%20II_STR_EN.pdf
[10] https://www.europarl.europa.eu/thinktank/en/document/EPRS_BRI(2023)754547
