Committee on International Trade Ordinary meeting Joint meeting Committee on Industry, Research and Energy Committee on the Internal Market and Consumer Protection HEARING
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INTA European Parliament
Follow its sittingsSander Tordoir
And I think all of us have some uncertainty about whether the EU is willing to deploy trade tools to respond to this threat, and so the IIA may be the main policy tool that the EU actually can put forward that's essential. Second, I think the IIA can create a level playing field not within the European and Chinese market, but across markets. WTO commitments have never stopped China from pursuing a de facto buy-local industrial policy, and no imported car or battery, for example, has ever qualified for Chinese subsidy lists. I think the IIA gives European manufacturers the same leg up in the European market that Chinese manufacturers enjoy in theirs, and is in that sense a level playing field measure. Third, I think the IIA is truly novel in that for the first time it provides a tool to harmonize national subsidy rules.
Most of Europe's industrial policy money will remain at the national level, and so harmonization is essential. Whereas earlier laws essentially allowed member states to subsidize more freely, the local content rules in the IIA actually create a degree of harmonization which is essential to avoid fragmentation. And fourth, I think the impact of this law could be substantial. Private capital is in fact fleeing European manufacturing, hedge funds are upping bets against European carmakers, and we know, for example, from research on the Inflation Reduction Act in the US, which has some echoes to the IIA, that de-risking this kind of China shock can actually bring private capital in. In the case of the IRA, every public dollar spent actually triggered four dollars of private investment, and I think that's one thing we should keep in mind.
Similarly, Citigroup, an investment bank, recently did a study showing that with an ambitious IIA, Europe can prevent a scenario in which China captures 30 to 35 percent of the European car market in 10 years and lower that to 15 percent. In other words, this makes the difference of about 2 to 2.5 million cars that Europe would be producing for itself or its allies like Japan rather than China. And in fact, China's market itself is very closed; it only imports 2 percent of its cars, so the 5 percent number in the medium term and 15 percent in the long run is still leaves Europe quite open. I think there are four areas where Europe should, so to say, go big or go home. First, close the escape clauses.
I think the current derogation rules basically risk swallowing the IIA whole. Member states can waive requirements on the IIA if products are more than 20 percent more expensive in auctions, 25 percent in procurement, and 30 percent in subsidy schemes. In a world in which China's currency is at least 20 percent undervalued, that leaves a gaping hole in the IIA, and I don't think it's necessary. Similarly, a technical point, I think the escape clauses should apply to whole projects, not specific products, to give that a bit more of a buy-European pull. Second, make the rules big enough to matter.
Industrial policy only works if the market is large enough, and I think at the moment the IIA does not fully pass that test. For example, for cement, steel, and aluminum, the provisions touch only less than 5 percent of the market, and local content requirements cover only 40 percent of the wind volume market, even though European firms obviously already supply far more than that. And so a rule that starts to matter only once Europe has already lost most of its market is effectively merely a backstop.
I would raise the coverage under the rules in those sectors to a much higher and ambitious level. Third adjustment, I would retain the corporate car provisions. Corporate car sales are 60% of the European market. If the IIA does not cover the subsidies and tax breaks that are given to the corporate side, which is where most of the action is, then it effectively loses bite. And so I think the corporate car side is essential to remain inside the perimeter of the purview of the law.
Fourth, probably most difficult, the trusted circle. How many countries should count as producing EU content? I think a simple definition that includes the EU and its immediate neighborhood is probably the most clear and effective, and then having a set of criteria to bring in key partners and allies. One very simple measure could be to see how much those partners actually are part of European production chains. You could measure, for example, the degree to which other countries like the UK or Turkey export embedded European content back to the European market, and both those examples would clearly qualify.
And maybe a final note on FDI conditionality. I think all of these adjacent measures, including also trade defense, will actually set incentives for Chinese and other firms to genuinely build factories in Europe with supply chains in Europe that employ Europeans. So the sum is more than its parts. And I think on the FDI screening aspect, the two thresholds of it applying only to 100 million euro or more investments and only applying to countries that have 40% of the market share essentially narrow the level and the number of investments that are covered to frankly just China. And so given that that is very narrow and does not actually impede markets elsewhere, I think the criteria should be quite strict, and I am not convinced that letting firms pick and choose between the most attractive criteria is the best way forward.
So I will leave you with that. I think in all these areas a level of ambition is justified. And as I said in my opening sentence, if the IIA is Europe's main tool to respond to this second Chinese shock, I think it's essential to make it count. Thank you for your attention.
Borys Budka
Thank you very much for the first opening remarks from our expert. So now it's time for Mr. Sebastian Schaffer, head of EU representation for Volkswagen Group. Seven minutes for you, please.
Sebastian Schaffer
Thanks a lot, Mr. Chairman, honorable members of the European Parliament. Thanks a lot for the opportunity to join today's debate. I have a home in Western France and because of that I'm a frequent visitor of the Rennes airport. And it might be a déformation professionnelle, but whenever I look at a certain sign at the security check... Can I see my slides, please?
Or do I have to put them on myself? Okay, so we have some technical issues, but what I wanted to say is there is a sign at the security check of this airport which says liquids above 100 milliliters are prohibited, except of caramel beurre salé, marmalade from Plougastel, and foie gras. And as I've said, it might be a déformation professionnelle, but it shows the universal human wisdom: there is never a rule without an exception.
And I guess that is showing kind of the balancing act that you as co-legislators have to deal with. Ah, now I see the sign on the wall, exactly. You have to balance out: on the one hand, you know you have to cover business reality, and that might in some cases mean some well-founded flexibilities and exceptions. But on the other hand, you need a clear set of rules so you can achieve the political goal you're striving for, which means basically securing European industrial jobs. As the Volkswagen Group, we operate factories in more than half of all EU member states, so we witness every day the immense pressure the European business model as a whole is under, driven by a vehicle market that has shrunk by more than 2 million units since COVID and an aggressive market entry of new Chinese competitors, for sure.
We also of course see the pressure facing our European supplier network, and when we lose volume, they do lose volume too. So that is why we have decided quite early in the political discussion as Volkswagen Group to take a clear stand in this debate. In February of 2026, our CEO Oliver Blume published a joint op-ed with his CEO colleague from Stellantis in three European newspapers, making the case for a Made in Europe strategy. And in July 2026, Volkswagen Group, Renault Group, and Stellantis published a joint position paper on the Industrial Accelerator Act, for our industry quite a unique franco-allemand alignment on this important file. So we leave no one in any doubt where we stand in this debate, and the guiding principle from our point of view must be: any company that accepts European taxpayers' money should also do something to save European taxpayers' jobs.
Ladies and gentlemen, with the Industrial Accelerator Act, the Commission has put a powerful tool in the hands of the co-legislator. It is now crucial that this powerful tool is not weakened by too many exceptions, and it is equally important that it is not hurting the very companies that are most committed to EU production. Let me give you some examples for both. Basic wisdom and simple logic: the broader the geographical scope, the weaker the incentives to maintain production within the European Union and to invest in the European Union. We at Volkswagen Group advocate for a narrow EU-27 EEA geographical scope that applies consistently to all forms of public supports and incentives.
There is for sure no doubt that our close friends from the United Kingdom can make a uniquely strong case for being treated on an equal foot, but apart from that, Europe needs a simple rule that prioritizes EU production while remaining fair to trusted trading partners. Against this backdrop, Renault, Stellantis, and Volkswagen proposed that if 70% of a group's fleet meet the Made in EU criteria, the remaining 30% can also benefit from the advantages which are linked to it.
This would allow limited imports from partners such as Japan, South Korea, Turkey or Morocco, provided most EU registered vehicles of a single carmaker are produced in the European Union. This approach strengthens incentives for local production. It keeps a clear focus on the EU 27 while also reflecting market reality and established trading relationships. On my second point: don't hurt those EU companies that you actually want to support. Battery criteria is the best example for that.
Through our battery company PowerCo, Volkswagen Group is investing heavily in our own European battery cell production in Germany and Spain. The same applies to our competitors such as Mercedes Group, Stellantis and Renault who are invested in the two French battery producers ACC and Verkor. These gigafactories are the backbone of a truly European battery cell industry, but they need time to scale up. Mandatory battery cell requirements should therefore not apply before 2030. Otherwise, only those companies who purchase the cheapest available batteries in the European market will be able to comply, not those who are actually investing the most in building up their own battery cell production capacity.
In the meantime, European battery producers such as the three companies I have mentioned need targeted production support to become competitive in the crucial ramp-up phase, and an adequate solution must be found from 2028 onwards. Otherwise, without it, made in EU rules would significantly increase the costs of our electric cars and thereby undermining their competitiveness. Last but not least, we at Volkswagen Group do not build our smaller electric cars in China. We build them in Spain and we will build them in Portugal because we firmly believe that as the European car industry, we cannot live from luxury products alone. We have to cover the full range of vehicle production in the European Union.
However, it is very challenging to produce these small EU electric vehicles with a European battery. It's simply too expensive. The Commission understood that, that is why the EVs up to 4m20 which fall under the new M1E subcategory can either comply via 70% EU components or an EU battery. We ask you to keep this flexibility intact. Ladies and gentlemen, imagine there is a made in EU and nobody is going to join.
There is a real risk that this regulation will price our cars out of the market. From a purely short-term cost perspective, it would often be cheaper to source everything from China, to be very clear and blunt about this. That is the reality of our everyday business. That is why it is so crucial that incentives make up for the additional costs of our products. And of course, the measures are already on the table.
It's about purchase schemes, it's about exclusive market access, it's about tax incentives. All of that will be part of the discussion for sure. To wrap it up, if you get it right, the Industrial Accelerator Act can be a historic landmark regulation. It can help to bring back a level playing field. It can help to save our industrial base.
For this, I wish us all the best.
Borys Budka
Thank you very much for your presentation. And now it's time for Mr. Benjamin Krieger, Secretary General, the European Association of Automotive Suppliers. The floor is yours.
Benjamin Krieger
Chair, thank you very much. Members of the European Parliament, also the many assistants that I see in the room, thank you for coming, thank you for inviting me, thank you for the chance to speak at this hearing, which is taking place at a very good moment in time, of course, on a topic which is very much at the top of our list of priorities. You will see that my presentation, although you normally say every number halves your audience more or less, there are quite a few numbers in there, but we think it's important to work with facts and with data, and what I'm going to present to you always comes from third parties, usually comes from third parties, so this is not something that we put together, this is something that experts put together for us, and we are sharing this in order to give you an insight into what we think reality looks like and what the reactions will look like for this reality. And I thought my slides were on the screen, actually, and now I saw them going away. But I will continue, and I trust the colleagues behind me are going to bring the slides back.
On the first slide that I would have shown you, trust me, there are a few numbers, 1.7 million jobs are still in our industry, and that is the automotive suppliers industry alone. 120 corporate members in CLEPA, in total about 3,000, many of them small and medium-sized enterprises across the European Union in this industry. The jobs in this industry are not interchangeable, are not simple jobs, many of them are very well skilled, very well paid. Many of them are covered by tariffs. Many of them offer workers' participation in company decisions, and that is something which I regard as a strength in Europe.
And that is, as we could read today in Handelsblatt, not the same in other markets around the world. So this is something where we in Europe not only have strength in innovation, we also have high-quality jobs in this industry, not to forget about 30 billion investment annually in research and development, which makes us together with vehicle manufacturers the biggest investor in R&I in Europe. And last but not least, 75% of the value of a vehicle comes actually from the suppliers industry. So this ecosystem that we do have here in Europe is strong, is still strong, it gives us quite some capabilities, but it also needs support because I will show you that there is pressure. This strength, by the way, also only is useful if we maintain it and if we make sure that Europe stays the place for investments.
Now on the pressure side, we see 3 million vehicles produced in Europe less than before the pandemic. That is quite a significant number, and that means that many of the factories are not fully utilized and also the supply chain not fully utilized, that puts pressure on the industry. The production of cars in Europe can cost 15 to 35% more than in best-cost countries. Our trade balance went in a very short amount of time from 7 billion euros surplus to 650 million euros deficit, just to show you the magnitude of the impact of competition from other markets. As a consequence, about three-quarters of the industry expect a profitability below 5%, 5% always is the magic threshold as of which you can say we are running a sustainable business.
Consequences, we saw the destruction of about 100,000 jobs in the last two years in our industry alone.
And about 350,000 jobs in total are at risk in the suppliers industry alone in the next years if we don't act. Once these jobs are gone, and I think this is important, this development is impossible to reverse. They won't come back. So we commissioned a study to Roland Berger to see what is currently, what do we still have in Europe. And this one was, was the right one.
I'm getting there, please bear with me. We saw what does the industry in Europe currently contribute to constructing vehicles. There's a capacity to produce 83% of the component value, the component value for battery electric vehicles, 83%. That's almost the entire vehicle in Europe. That's the capacity.
That's not what we currently see, but this is what we could do, 83% for battery electric vehicles. 89%, so even more than that for plug-in hybrid vehicles. That would be production in Europe with jobs in Europe. And there was news at the beginning of the year of one large contract awarded by a European manufacturer to one member of ours, a company in the supply chain, producing gearboxes for plug-in hybrid vehicles. This one contract saves the future, I'm simplifying a little bit, but it's not untrue, saves the future of a whole plant in Germany with about 9,000 workers.
Just to show you the impact of what the discussion on the possibilities or not for different technologies also in this house, in this room, has on this industry. We propose on the basis of what we found, around 75% of the value of the components is a feasible threshold. 75% to confer European-made vehicles. The Commission has proposed 70%. That gives a bit more flexibility, but we believe that on the basis of the data, again, all of this is public and we are very happy to share this if you're interested, please do reach out, we send this immediately.
We believe that this is feasible and we believe that this is well placed in the proposal by the European Commission as it has been done now. Similar for critical components, 50% for example for e-powertrains or electric core systems, the critical components. We believe it's feasible and we believe that we also need to cover those because we do not want to be dependent on other regions for those critical technologies for the future of mobility and we hope that this is going to be made also in Europe. On why a few observations on our methodology. So it's important to keep apart the numbers, to differentiate the numbers.
70% component value does not mean 70% of the vehicle value. We looked only at the supply chain. And yes, there is a discussion also on value add from other actors in the supply chain and I think there is full justification to discuss this. But if we want to put this into the scope of what we are discussing now, the rules that we are discussing now from the annex in the Industrial Accelerator Act, if we want to expand this, then we also need to talk about the numbers that correspond to what we want to achieve. So if 70% plus further activities not from the supply chain, then we would also need to talk about 70% plus X to account for this.
I'm running out of time, I know. I don't want to leave you without making one last point. We heard before, if we get the Industrial Accelerator Act right, that gets us forward a big step.
I agree with Sander who said the same thing. I disagree it cannot be the only thing. This is not the silver bullet. Yes, we need to get it right, but we also need to make sure that Europe is and stays a destination for investments so that we keep developing our strength. And in there we also need, and that's the flip side, we need to look at regulatory predictability, faster permitting, electricity prices, and I think important also for this house, the many rules that govern business activity in Europe, all of them well-intentioned, maybe not all of them as effective as we would like them to be.
We need to be much more critical, we need to do much more work in order to make sure that we can compete with other markets with an element, with elements of protection in there, not protectionism, elements of protection to level the playing field against unfair competition and also giving industry the flexibility that we need to deliver the solutions, to deliver this transformation that we all want to make a success. Thank you very much.
Borys Budka
Thank you, Mr. Krieger, and now it's time for Mrs. Judith Kirton-Darling, General Secretary Industrial.
Jude Kirton-Darling
Thanks very much, chair, chairs, members. Industrial Europe, just to remind, is the European Trade Union Federation representing manufacturing, mining, and energy workers across 39 European countries, 7 million workers in 200 trade unions. And what we are experiencing is a gradual weakening of our industrial fabric across Europe and it has profound consequences for jobs, innovation, strategic autonomy, and regional cohesion. On the 3rd of June, when presenting the European Semester Spring Package for 2026, Executive Vice-President Roxana Mînzatu warned that up to 1.3 million manufacturing jobs in Europe are at risk in the coming months. Europe risks losing not only jobs, but also technology, production capacity, and strategic autonomy.
Plant closures, shrinking production, delayed investments, and growing uncertainty. Entire industrial ecosystems, as we will hear this afternoon, are under pressure. As DG GROW's quarterly report concluded in June 2026, the lack of demand remains the single biggest constraint on European industry. And according to a forthcoming ETUC research on the IAA and the cost of inaction, every 1% decline in demand in energy-intensive industries translates into approximately 28,000 job losses across industrial value chains in Europe. Europe needs investment in our factories, technologies, research and development, skills, and workforce.
And what it does not need is a managed industrial decline while profitable companies continue to reward shareholders and relocate production. In the automotive sector alone, major European carmakers generated 469 billion euros in net profits between 2012 and 2025. During the same period, they distributed 189 billion euros to shareholders through dividends and share buybacks, while still holding 177 billion euros in cash and short-term investments at the end of 2025. Our research, on the basis of their reports, their financial reports of those same seven major European automotive manufacturers, identified billions in grants, subsidies, and tax advantages, as well as public loans, all provided without any meaningful requirements concerning jobs, investment guarantees, relocation, or any clawback mechanisms.
So the question, therefore, is not whether the money exists to invest in Europe. The question is where companies choose to invest it. And this is why the Industrial Accelerator Act matters so much for European workers. Industrial Europe insists that public money must deliver public value, and you as public policymakers must steer investment in our industries. By using public procurement, state aid, public support, and lead market creation, Europe can generate predictable demand for products made in Europe, stimulate investment, strengthen industrial value chains, and accelerate the green transition.
But let's also be clear: this debate is not only about competitiveness. It's about where value is created, who benefits from public support, our social cohesion, and whether the green and digital transitions will strengthen Europe's industrial base or accelerate deindustrialization and increase our strategic dependencies on others. Sorry, I'll just take a drink. Strategic dependencies on others who can then set the price and influence our capacity to meet our own needs and decide our own future. And that's why we strongly advocate a Made in Europe approach.
We're not talking about autarky. We are dependent on export-driven industries. But we want real strategic autonomy with balanced, fair trade relations. And there are two key issues for us in terms of the geographical and the substantive scope of the IAA and related acts dealing with Made in Europe, I should be absolutely clear, because it's not the only place that we're talking about Made in Europe. Setting a European preference needs a geographical scope that fits European supply chains, keeping in mind the transnational nature of industrial supply chains and their role in fostering a peaceful economic integration across our continent.
We believe that it's important to avoid a too restrictive geographical definition of European content. So in addition to the countries that are part of the single market, the EU and the EFTA member states, candidate countries should be seen as part of the scope, provided that strict rules and enforcement prevents social and environmental dumping. And in the same way, products that are in line with the EU-UK TCA rules of origin should also be considered as European, as this is the only FTA that the EU has which has a level playing field clause on environmental and social standards. Any expansion of the scope of eligibility for Made in Europe must be accompanied by conditions on social and environmental reciprocity, not just market access reciprocity. Made in Europe must be more than a geographical concept.
It must be a guarantee of quality jobs, strong social and environmental standards, collective bargaining rights, skills development, and fair reciprocity in trade relations. And this is why the mandatory employment conditionalities on FDI are essential for European workers and ensuring a level playing field.
Nationalities should legitimately be horizontally applied through all of the tools of the IAA. On the substantive scope, Made in Europe cannot simply mean the final stage of assembly takes place somewhere within the European Union. Made in Europe must mean that value is genuinely created in Europe, and that means ensuring a stake in the full value chain: raw materials, batteries, power electronics, software, engineering, research and development, manufacturing, and final assembly. And this is why Industrial Europe supports robust local content requirements and meaningful European content thresholds. In the automotive sector, for example, vehicles benefiting from public support should meet an 80% European content requirement.
This would reflect our current and our aimed manufacturing footprint, according to industry data as we've already seen and the data from the JEPISA academic network. Equally, the clean tech suppliers should be better included with specific mention of key components in these growth, vital growth industries, and here I would explicitly talk about the wind manufacturing sector in terms of components. Industrial Europe strongly welcomes the creation of lead markets and the use of public procurement and auctions, but we question whether the proposed thresholds for low-carbon materials, 25% for aluminium and steel, 5% concrete and mortar, or in clean tech, 40% of wind auctions, 8 gigawatts, is sufficient for meaningfully reshaping markets and investment decisions. I've concluded. So we want to see those provisions tightened.
We also want to see Made in Europe applied to the steel sector. It makes no reasonable business case to exclude Made in Europe steel from the provisions. So finally, the European Accelerator Act is a historic opportunity to rebuild Europe's industrial future. It's not a silver bullet, but it's vital for the business case, and it's vital for our members and workers in every corner of Europe. Thanks very much for listening.
Borys Budka
Thank you very much. And now we switch to our rapporteur's turn. So first I will give the floor to Anna Cavazzini, INTA co-rapporteur, two minutes.
Anna Cavazzini
Thank you so much, and thanks to the excellent experts. I mean, what you're describing is the reality we see, and of course it's not a very good reality with industry jobs being at danger and also whole industry at the brink of collapse. So I think you made it very clear that we need urgent action, and we are on it. Of course, I personally would have preferred to not be in this situation, and I think at some point we probably all of us need to reflect also how we got there. For example, this crazy relocation policy, or also management decisions by companies, or also, you know, policy decisions that led to the fact that we sleepwalked in this situation with the second China shock.
But now we focus on what we can do. And I think from all of you we heard actually that the IAA can be a very powerful tool to reverse the trend, and I think that's very good news. I think all of you also said we need to make it right, and a lot of you said we need to strengthen it. And I can probably not talk about too many secrets if I say that the three co-rapporteurs that we are working on the draft report are already committed to strengthening parts of the report, or parts of the Commission proposal, a lot of points that you mentioned. But let's now come to the questions.
I have basically one big question that we were also internally discussing a lot because it's not so easy, how to deal with circumvention, like do you have any great, very concrete idea on that? And then probably one remark, question to the Volkswagen supplier group over there.
For me, I only want not only want to have cars made in Europe, but also batteries made in Europe. And I I see it, and this is the feedback we get from a lot of different stakeholders, depending on whom you talk to, of where you are. If you ask a local authority, they also don't want to buy more expensive stuff. But if we all agree that we want industry in Europe, then of course also the batteries have to be made in Europe and the components have to be made in Europe. So probably a question back to Volkswagen.
We hear that there are the capacities. What do you think about a more accelerated battery timeline or not slowing it down like you mentioned? Thank you.
Christophe Grudler
Merci, Monsieur le Président. Merci aux panélistes pour la qualité de leurs interventions. En tant que rapporteur sur le texte pour ITRE, je voudrais poser un problème que ce texte va devoir traiter. La crédibilité industrielle de tout dispositif Made in European Union repose sur la solidité, pardon, de sa définition d'origine. Le texte actuel, il dit c'est quoi le Made in Europe?
Il s'appuie uniquement sur le critère de la dernière transformation substantielle. Ce critère, il a été conçu pour le régime douanier. C'est le code des douanes. C'est pas pour une politique industrielle. En pratique, quelques opérations d'assemblage final en Europe peuvent suffire à conférer l'origine Union européenne à un produit dont l'essentiel de la valeur technologique, composants stratégiques, valeur ajoutée, reste totalement hors d'Europe.
C'est le trou dans la raquette qui aujourd'hui vide le dispositif de sa substance. Nous devons donc combler ce vide, et c'est notre responsabilité déjà en tant que co-rapporteur avec les collègues. Il serait possible d'imposer une valeur ajoutée Union européenne d'au moins 40 à 50%. Ces seuils, ils correspondent au standard des accords préférentiels de l'Union européenne. Donc ils seraient alignés sur ce qui existe déjà.
Et ils seraient moins stricts que ce que l'IRA, par exemple, aux États-Unis, imposait dans plusieurs secteurs. Donc rapidement mes questions. La première question à Sander Tordoir, dont j'ai lu les études sur l'autonomie stratégique. Est-ce qu'un critère d'origine reposant uniquement sur la dernière transformation substantielle, est-ce que c'est suffisant pour capter les dépendances stratégiques réelles de l'Union, ou est-ce qu'il faut ajouter un critère de valeur ajoutée dans l'Union européenne? Et ma deuxième question à Sebastian Schiefer et à Benjamin Krieger.
Est-ce que la règle actuelle reposant sur la dernière transformation substantielle pour définir l'origine est difficile à justifier pour les composants d'un véhicule? Comment éviter que la demande de simplification n'affaiblisse le dispositif au-delà évidemment d'un allègement administratif légitime que nous souhaitons tous? Sans définition robuste, le Made in EU restera une déclaration d'intention. Votre éclairage sera donc très utile. Merci.
Pierre Jouvet
Merci, Monsieur le Président. Chers collègues, en complément de mes deux autres collègues co-rapporteurs, vous remercier d'abord pour vos interventions qui vont dans un sens sur lequel nous insistons et sur lequel nous travaillons. D'abord et avant tout, la question d'un critère géographique. Comment évoquer un texte sur la réindustrialisation européenne, sur une préférence européenne, et faire de la définition de l'Europe UE plus le reste du monde?
Nous ne serions ni crédibles ni sérieux si nous restions sur la base du texte tel qu'il a été fait. C'est la raison pour laquelle vous l'avez tous rappelé, la nécessité de définir les critères d'un point de vue géographique mais aussi de la réalité par rapport aux chaînes de valeur et ça c'est un point extrêmement important puisqu'il est nécessaire que nous soyons en capacité non pas simplement de nous refermer sur nous-mêmes mais d'être en capacité d'imposer de réelles mesures de réciprocité. Et c'est ça l'essentiel. On voit aujourd'hui les dégâts catastrophiques qui sont produits par l'activité économique générée par l'influence chinoise dans de nombreux secteurs d'activité. Monsieur le représentant de Volkswagen a parlé notamment de ce qui se passait dans le monde de l'automobile et on voit la vitesse à laquelle la surproduction, les surcapacités, le dumping imposent aujourd'hui des mesures plus efficaces et plus fortes de notre part.
Et moi je compléterai simplement ce qui a été dit par Anna Cavazzini et Christophe Grudler par une question complémentaire. Comment selon vous pouvons-nous éviter d'avoir un texte qui serait immédiatement contourné et vidé de sa substance si le dernier point d'arrivée, c'est-à-dire pour la faire claire, la multiplication d'usines tournevis partout sur le continent était acceptée dans un texte avec la faiblesse aujourd'hui du code douanier ? Je vous remercie.
Borys Budka
Thank you, rapporteurs. And now we've got the turn for our shadow rapporteurs. So remember about the time, one minute, and then ENVI rapporteur, two minutes. So first from EPP from INTA, Dirk Gotink.
Dirk Gotink
Thank you very much, Chair. I have one minute, so I will skip the niceties. Thank you, experts, of course. And I think the main issue here is that I think many of us are all pulling on the same side of the rope. We want a more competitive, stronger industry in Europe, and not only the classical industries but also the future industries.
But that doesn't necessarily mean we're trying to do the same thing for everyone. I have some specific questions. First to Mr. Tortoy, he talked about selecting the geographical scope based on embedded value, existing value. Can he please elaborate on that? Because it's of course one of the big questions.
Mr. Juvé already mentioned it, how to explain that something is made in Europe if it's made in South Korea? You know, it simply is a bit, I think it's a bit mean by the people who sent this proposal over to Parliament because actually in the end the narrative always comes back to EU 27, of course, because made in the EU is made in the EU. So there are people that are also thinking about an alternative category, adding a category and getting out of the binary Europe or non-Europe. Is there a strategic sort of category possible? Would that allow for a more precise treatment of a certain group of countries like our strategic partners that very few people I talk to would like to exclude from our relationships?
And I had one more question but simply there's no time. Thanks.
Raúl de la Hoz Quintano
Sí, muchas gracias. Hablaré en español y por ir de forma directa a las preguntas. Le preguntaría al representante de Volkswagen. La propuesta recoge distintas definiciones de los requisitos de origen, distintos criterios, sean estos para contratación pública, para ayudas públicas o también para cuando hablamos de flotas. ¿Le parece esto adecuado o cree que ayudaría más a la industria si avanzamos hacia una única definición con unos únicos criterios?
Y en el mismo sentido, si aceptamos una única definición, ¿no tendría sentido también hablar de un único modelo de cálculo y de verificación? También respecto del requisito establecido para las flotas de los fabricantes, ese 85 %, ¿lo considera exagerado, lo considera adecuado para reflejar la realidad de nuestras cadenas de producción? Al representante de CLEPA le preguntaría sobre la definición del Union Origin. ¿Cómo creen que se puede solucionar el problema que se les está generando, que les puede generar a los proveedores cuando la acreditación del requisito de origen no depende de ellos, sino de aguas arriba, de los Tier 2 o los Tier 3? Y por último, a IndustriAll Europe y en relación con los requisitos establecidos para las inversiones extranjeras.
Saben que uno de los requisitos está referido al empleo y en concreto a que el 50 % de los trabajadores, concluyo, sean trabajadores de la Unión. ¿Lo consideran suficiente o creen que podría incrementarse, sobre todo cuando estamos hablando de inversiones que en algunos casos pueden recibir ayudas públicas? Nada más.
Tomislav Sokol
Thank you very much. I'll try to be as fast as possible. So first thing, first point, I think this is urgent because from every discussion that I had with more or less every European industry, they said that essentially they are being flooded by products from unfair competition abroad and that we don't have a lot of time. So our window of opportunity is maximum two or three years to save European industry, otherwise there will be no European industry at all. So we don't have time.
This is extremely urgent. Unfair competition from abroad, from the East, is extremely strong and if we don't act, there will be no European industry anymore in a couple of years. Second thing, IA is pretty limited. So it has to be said that this mainly applies to public procurement, so the idea is not to close European market to anybody and this is something that needs to be mentioned and this is also limited to some sectors. I think it should... it should be expanded in some extent, but this is still very, very limited.
What is also important is when we speak about Made in EU, that we also include our friends, our geopolitical friends as well, who are compatible with our values as much as possible. The third point, Europe is strong. Europe is not weak. We have the biggest market in the world and we should leverage this and we should not approach this as being weak, as being someone that cannot do anything. I think that we have to leverage our market as much as possible.
Concrete question to Volkswagen. So we have Made in EU requirements in public procurement, specific conditions attached to public financial support and the separate approach for small zero-emission vehicles through super-credit mechanism. From your perspective, does it make sense to maintain these differentiated regimes with different rules depending on the type of public intervention? Thanks.
Thanks. Kathleen Van Brempt from INTA.
Kathleen Van Brempt
Thank you. Thank you very much. My first question to all four of you goes also in the direction of Made in the EU and the geographical scope. We tend to agree all and then I listen to you and the one says, yeah, we need the enlarging countries with them and I personally sympathize because I think they are important. The other say, no, the UK or friends, you know, the geographical... the geopolitical friends.
I don't think it works like that. The European Parliament will go in the direction of an opt-in, not an opt-out, because the proposal of the Commission is not workable.
Jens Geier
Danke, Herr Vorsitzender. Meine Frage ist sehr nah an der von Kathleen van Brempt, weil die Frage, nach welchen Kriterien kommen wir zu der Auswahl der Staaten, die als of European origin gelistet werden sollen, ist ja in der Tat für dieses Dossier ziemlich zentral. Jetzt hat Herr Todoire ein Kriterium in die Diskussion gebracht, wo ich noch mal nachfragen will. Wenn ich ihn richtig verstanden habe, sagte er, wir sollten diese Staaten sozusagen entlang der Stärke ihrer Wertschöpfung für die europäischen Lieferketten auswählen. Und meine Frage ist, haben wir dafür eigentlich eine ausreichende Methodologie bzw. eine ausreichende Datengrundlage, weil sehr viele Produkte sind mittlerweile global organisiert.
Von hier kommen die Schrauben, von woanders kommt das nächste Teil. Ich glaube, es wird immer schwieriger, sozusagen ein Herkunftsland genau zu definieren, wenn man es nicht, und das wollen wir glaube ich alle nicht, nur an dem Land orientiert, wo es am Ende zusammengeschraubt wird. Also wo wäre die Datengrundlage für den Vorschlag von Herrn Todoire? Dankeschön.
Daniele Polato
Grazie, grazie Presidente. Se vogliamo difendere l'automotive europeo, indebolito dalla concorrenza sleale estera e dall'elettrificazione imposta dal Green Deal, serve invertire la rotta con azioni urgenti. Neutralità tecnologica con un quadro regolatorio che non demonizzi i motori a combustione. Le scelte recenti hanno indebolito la nostra industria a vantaggio dei competitor. Stop alla finta origine UE.
La clausola di equivalenza potrebbe consentire l'importazione illimitata di componenti da paesi terzi senza standard sociali e ambientali. I fondi europei non devono finanziare lavoro e produzione fuori dall'Unione Europea. Coerenza normativa. Il mix tra Made in Europe e equivalente low-carbon non deve diventare un nuovo boomerang contro le nostre imprese. Ai rappresentanti dell'automotive due domande.
Qual è la vostra prospettiva per trovare un reale bilanciamento nell'IAA e quali correttivi servono per evitare che l'IAA si traduca in ulteriore burocrazia, ossia assist alla delocalizzazione? Grazie.
Anna Zalewska
Thank you, I will speak Polish. Nie wiem czy państwo pamiętają, ale zaczynaliśmy tę kadencję obradami na sesji plenarnej od tematu katastrofy na rynku motoryzacyjnym. Minęło sporo czasu, deklarowaliśmy, że wesprzemy nie tylko przemysł motoryzacyjny, ale w ogóle przemysł, a my dzisiaj jeszcze mamy dalej wątpliwości. Ja mam wrażenie, że Komisja Europejska deklaruje, a nie realizuje, że ci, którzy bronią europejskiego rynku, nie są wysłuchiwani.
Są spore wątpliwości dotyczące tego dokumentu, od takich najbardziej oczywistych, że to kolejne narzędzie dla Komisji Europejskiej, że ona ostatecznie będzie zatwierdzała inwestycje zagraniczne, przez wątpliwość, czy dokumenty nie będą się na siebie nakładać albo się wykluczać. Przypominam o dokumencie o kontroli inwestycji zagranicznych z grudnia 2025 roku. Zresztą mam wątpliwości co do małoprecyzyjnych zapisów i o to są najważniejsze uwagi, najważniejsze pytania. Czy przemysł wie, jak przepis zastosować, jak sobie z nim poradzić? Mało tego, czy wszystkie normy, procenty i liczby są możliwe do zrealizowania?
Trzeba uczciwie postawić sobie sprawę i w dodatku jasno, dlatego że za rok spotkamy się znowu i będziemy biadolić, że nie udaje nam się uratować europejskiego przemysłu.
Nikola Minchev
Sorry, Mr. Chair, I didn't hear you because... Yeah, just... Okay, thank you. Thank you very much, Mr. Chair, dear chairs, dear colleagues, dear panelists. There's no dispute that the EU must strengthen our industry in strategic sectors, reduce dependencies, and improve the competitiveness.
And the success of the Made in EU ultimately depends on getting the balance right, achieving these objectives while remaining committed to free trade and open markets. With significant public spending, we need to ensure that European taxpayers' money effectively strengthens our industrial base rather than simply financing production elsewhere without meaningful added value for the EU economy. At the same time, we have strong relations and FTAs with trusted partners, and we must also respect our international commitments and maintain close relations with like-minded allies. So I believe two principles are key: reciprocity and preventing circumvention. And my questions to the panelists would be: what would you consider the most effective and workable way to apply these principles in practice?
And secondly, how can we ensure and verify that companies are not simply relocating the final stage of production to the EU to formally qualify as Made in EU, but creating genuine added value for the EU? Thank you.
David Cormand
Merci, merci beaucoup messieurs-dames les présidents, chers collègues. Une première question pour madame Kirton-Darling. On parle beaucoup de compétitivité comme condition de la réindustrialisation de l'Union européenne, mais j'aimerais avoir son avis sur dans quelle mesure cette compétitivité elle passe par l'attractivité pour des salariés, des employés industriels qui soient qualifiés et donc bien payés, et aussi comment de son point de vue on a une valeur ajoutée en matière d'économie plus circulaire pour maîtriser toute la chaîne de production dans l'Union européenne et qu'on ne soit pas comme ça a été dit par l'intervenant précédent cantonné à la dernière phase de production mais qu'on ait bien la maîtrise globale sur tout. Et une question à monsieur très rapide à monsieur Tordoir.
Je vois dans son parcours qu'il a travaillé sur la BCE. Une stratégie industrielle, c'est des règlements, c'est du protectionnisme écolo et européen, mais c'est aussi de l'investissement. Et moi j'aimerais avoir son analyse sur c'est quoi nos capacités d'investissement et d'aide institutionnelle pour réindustrialiser. Et ça pose la question de qu'est-ce qu'on fait de la dette, qu'est-ce qu'on fait de la capacité budgétaire, parce que sinon on sera sur une seule jambe, on sera pas sur nos deux jambes. Il y a la jambe réglementaire, mais il y a la jambe aussi d'investissement et de capacité d'investissement.
Rudi Kennes
Thank you, thank you chair, I will speak in Dutch. Mijn vragen die gaan aan de vertegenwoordigers van de automobielindustrie. Ik zou ze willen vragen hoe dat zij hun verantwoordelijkheid zien in de de-industrialisatie van Europa en de huidige crisis in de automotive sector. Want ik ben een voormalig automobielarbeider en ik heb het natuurlijk allemaal van op de eerste rij mogen meemaken. Hoe uw industrie de permanente herstructurering organiseerde met outsourcing, delocalisaties en bedrijfssluitingen tot gevolg.
Altijd maar weer opnieuw op zoek naar plaatsen zoals Zuid-Korea, China, Mexico, Marokko of India om nog lagere lonen te kunnen betalen en vooral geen hinderlijke milieuwetten tegen te komen. Er zijn miljoenen werknemers ontslagen, ik ben er zelf één van, en diegenen die nog wel mochten blijven werken die mochten heel zwaar inleveren. Gaan jullie de verantwoordelijkheid opnemen dan voor het bijna vernietigen van de Europese automobielindustrie? Twee, nu de crisis in volle gang is en niet alleen de werknemers treft, nu komt u naar Brussel om geld te vragen. Dat is goed, maar wanneer u dat geld en die steun gaat krijgen, gaat u dan de schade herstellen die is aangericht?
Gaat u daadwerkelijk investeren in Europese skills, werknemers en het milieu? Of gaat de Europese belastingbetaler en de vruchten van mijn collega automobielarbeiders opnieuw gebruikt worden om de winsten te boosten? Dank u wel.
Thank you very much. And now Marina Mesure from ITRE.
Marina Mesure
Merci Monsieur le Président, merci aux intervenants. Deux questions, la première pour Madame Kirton-Darling. Vous avez expliqué très clairement que l'une des principales menaces qui pesait sur notre industrie, c'était notamment le manque d'investissement dans l'outil productif, et par contre on a vu effectivement des dividendes qui sont versés largement aux actionnaires. Donc quelles sont selon vous les conditions centrales qui pourraient être intégrées dans ce texte qui nous est proposé pour être certain que ces investissements iront bien là où ils devraient aller, c'est-à-dire dans l'outil de production et dans les conditions de travail de celles et ceux qui font tourner l'outil productif? La deuxième question serait plus sur l'automobile.
Donc on sait bien qu'en tout cas au niveau de la recherche et développement, c'est une des valeurs ajoutées les plus importantes d'un véhicule. Est-ce que quelle place en fait quelle place on peut donner justement de cette recherche et développement dans la définition du Made in Europe au sein d'un véhicule, puisque je sais que c'était aussi une question importante qui nous a été remontée lors des discussions. Donc est-ce que vous pouvez répondre à cette deuxième question? Merci.
Hanna Gedin
Tack så mycket.
Jag tänker att för att den gröna omställningen ska vara socialt rättvis så behöver offentliga medel och strategiska investeringar också villkoras mot goda arbetsvillkor. Det är precis så som man har gjort med IRA-akten i USA. Och därför så undrar jag lite över konceptet Made in EU och hur man kan göra det till någonting annat än bara ett geografiskt begrepp. Vilka sociala krav är det som ni i panelen bäst tycker representerar europeiska värderingar och därmed också borde framgå i kravlistan för att räknas in i konceptet? Jag välkomnade herr Kriegers benämning av arbetstagares inkludering i beslut på jobben till exempel.
Och hur ser ni i panelen att förordningen bäst kan utformas för att fasa ut bruket av lägsta pris enbart som ett avgörande kriterium i upphandlingar och istället just garantera att sociala hållbarhetsvillkor och arbetares villkor ges en bindande och tungt vägande vikt i tilldelningsbeslutet? Det är någonting som jag tror skulle stärka den europeiska konkurrenskraften.
Jana Nagyová
Thank you very much for the contribution and for the lot of questions which by the way I think I consider as highly relevant. And I'd like to ask question. Made in Europe concept together with the new rules on public support and fleet credits under Industrial Accelerator Act is presented as a way to strengthen European industrial base. Yet Commission's own impact assessment from 2026 explicitly warns of supply change fragmentation and the risk of retaliatory measures from our global partners. How do you access this risk from the perspective of your own global supply chain and export activities?
Are we not effectively protecting European industry on one hand while simultaneously making European exporters less competitive in third countries? And ultimately is there not a real risk that measures designed to strengthen European competitiveness could at the end of the day weaken it up? Thank you.
Borys Budka
Thank you very much. And now it's time for our rapporteur from ENVI, committee giving opinion, so Mrs. Mathilde Androuët and it will be remotely.
Mathilde Androuët
Oui bonjour. Donc on s'aperçoit au vu de ce rapport qu'une politique crédible du Made in Europe ne peut pas se limiter à apposer une simple étiquette européenne sur des produits dont l'essentiel de la valeur, des composantes stratégiques ou du savoir-faire est encore créé hors d'Europe. L'argent public européen, et c'est notre principe, les aides d'État, les marchés publics doivent d'abord soutenir une valeur industrielle produite sur notre continent. C'est pourquoi dans le rapport pour avis, nous défendons des règles d'origine claires, fondées sur une transformation substantielle et sur une part significative de valeur ajoutée européenne. À l'inverse, nous sommes très réservés face à un système qui assimilerait trop largement, voire automatiquement, des productions issues de pays tiers à du contenu européen au seul motif qu'ils sont liés à l'Union par un accord commercial.
Il faut également éviter que le Made in Europe devienne un simple outil de communication alors que les chaînes de valeur continueraient à se déplacer hors de l'Union. Et dans le même temps, l'Europe doit évidemment rester attractive pour les investissements étrangers. Nous avons donc besoin de capitaux, de nouvelles capacités de production et d'investissements industriels. Mais attirer des investissements ne doit pas signifier importer de nouvelles dépendances. Lorsqu'une entreprise étrangère investit dans un secteur stratégique européen, nous considérons qu'elle doit contribuer concrètement à notre économie par des emplois européens, par la formation de nos travailleurs, par de la recherche et développement réalisée en Europe, par le maintien de compétences et de savoir-faire stratégiques, mais également par une véritable intégration dans les chaînes d'approvisionnement européennes.
Il faut enfin intégrer la dimension environnementale. Remplacer une usine européenne soumise à des normes sociales et environnementales exigeantes par des importations produites avec une énergie beaucoup plus carbonée ne constitue pas une réussite climatique. Cela revient simplement à déplacer les émissions, les emplois et la production en dehors de l'Union. Notre objectif doit donc à la fois être industriel, social et environnemental : produire davantage en Europe, préserver nos compétences et réduire nos dépendances tout en décarbonant effectivement notre base productive. Face à l'importance de ce texte pour l'industrie et pour tant de travailleurs et leurs familles, donc j'invite mes collègues de la commission environnement à dépasser les clivages politiques et à être à la hauteur de notre devoir.
Ma question est donc la suivante : considérez-vous qu'un investissement étranger ne peut être réellement bénéfique à l'Europe que s'il garantit qu'une part substantielle des emplois, de la valeur ajoutée, de la recherche et du savoir-faire stratégique qu'il génère reste effectivement en Europe ? Je vous remercie.
Speaker 35
Yes, thank you very much. I like to believe that the Made in Europe, it's not a purpose in itself. The whole thing is about strengthening, enhancing the European competitiveness, economic European competitiveness. That's why I'm wondering if you are satisfied with the horizontal approach towards the topic, because the industry does not exist in a bubble of itself, it's an ecosystem. And we have to look at the financing of this, so what about capital markets?
You have to look at the telecom sector and infrastructure for digital and according with the reports we had from Letta and Draghi. So I'm wondering if you are satisfied with the approach taken horizontally towards the enhance of competitiveness with regard of this industrial increase of European Made in, let's put it this way. Thank you very much.
Borys Budka
Thank you very much. And now we go back to our experts, but this time it will be... Yeah, this was the one request from the members and I haven't seen... Ah, okay, dear Chair, I haven't seen your nameplate vertically, sorry.
Bernd Lange
Okay, three short questions. First, this IRA will lead to higher price and higher profit. Will there be a guarantee for workplace and investment in Europe and not outside Europe? Second question, in all the discussion I heard that the main problem is China. And if you're looking to the figures on price competition, on value competition with South Korea, with Japan, with UK, there is not a major problem.
It's really China. Is this worth to direct more or less a harm to all trading partners and indeed the main target is only China? Should we not go for specific measures towards China? And Jude, did you talk to the workers at Volkswagen in South Africa and to the workers at Hyundai in Korea and Nissan in UK?
Borys Budka
Thank you chair, perfect time. And now it's turn for our experts, but this time it will be five minutes for each expert and we will start with Mr. Sander Tordoir.
Sander Tordoir
Hi, thank you so much for the great questions. I am going to go through them very quickly since there were so many good ones. First of all, is the IIA a silver bullet or not? Ms. Kirsten Darling and several MEPs brought this up. It obviously is not.
I didn't make that case. I think the question is a distinction between the normative and the analytical. It is my hunch that some of the trade defense tools will be harder to bring online given concerns in member states about Chinese retaliation than it is to work with the intra-EU regulatory power of the single market itself. So it's just an observation I think on likelihood, but in principle I think trade and industrial policy should push in the same direction. Second, there was a question about affordability.
Just to give you a sense. In the US, the Inflation Reduction Act and the Chips and Science Act combined cost about 0.5% of US GDP a year before the IRA was rolled back by the second Trump administration. So just to give you as a general matter, I think industrial policy is not what fundamentally drives fiscal challenges, which of course are real in some member states. And I think the IIA allows essentially the stronger fiscal member states to subsidize some of their industry whilst remaining open to competition from elsewhere in the EU and beyond. And so that is I think the logic.
And most of what the IIA will do is harmonize existing subsidy schemes, so I don't think there's necessarily an additional fiscal cost. Third, I think there is a obviously always a trade-off between shielding your domestic market and losing third market competitiveness. And the greater degree to which the IIA can actually subsidize supply chains in intermediate goods, the greater the benefit for Europe's external competitiveness, whereas let's say countervailing duties would have to be targeted in my view more on final products. And so that's a way of managing this trade-off. Fourth, to the chair's question, is the main issue China?
In my view, yes, but I also understand the EU regulatory logic of drafting laws that are in principle country agnostic. And I think some of the thresholds, including in for example FDI screening in the draft law, manage to address the problem whilst remaining in theory horizontal. And I agree as well with what the chair said, that obviously the EU would want to cut the UK, Japan, Norway, Switzerland and other closely integrated economies with which Europe has productive trade as much in as possible. Fifth point, how to avoid circumvention, probably the most difficult. I think it would make sense to put as an explicit reason for excluding certain trading partners from the IIA in the legislation if those countries become a conduit for embedded content.
And in some ways the proof will be in the pudding whether the Commission is willing to actually deploy that power as a way to deter other trading partners from facilitating circumvention.
Finally, on the geographic scope and the definition of transformation. I think MEP Goting and others brought this up. I'm not opposed to a very simple tiered structure where you have EU plus EFTA geographic Europe broadly defined as the top tier and then have a lower tier for FTA partners. I think cutting all of the EU's FTA and GPA partners in is too broad and weakens the bill too much. The criteria I presented in the beginning was a simple one, a bit crude, but you could simply look at percentage of EU value add in a partner's exports.
So the UK, Turkey, Morocco, Norway, Switzerland, such countries tend to actually source a lot from the EU to then re-export. And so whether you do it in a geographic tiered structure or whether you use that definition, you end up with a pretty similar list. I think the challenge would be to bring in far-flung partners like Australia, Japan, Korea, Canada, who are less embedded in European value chains and there you may have to work with some sort of economic security criteria. And finally on the definition of substantial transformation. I think it's a useful baseline because it's part of the kind of customs bread and butter.
And I think the Commission proposal does a good job going beyond that by looking for example at key components in the manufacturing value chain for cars. So in certain key strategic areas I agree with some of the MEP's comments that substantial transformation in the customs definition may be a bit too limiting and you want to go a bit further, but I continue to believe that as a first approximation it's quite useful. Thank you so much for this discussion.
Sebastian Schaffer
Thanks a lot for all of these interesting questions, so many of them that I feel we should order pizza for everyone and stay until midnight, but harsh reality is I have five minutes so I try to address the most crucial points very briefly. Anna Cavazzini asked about the battery timeline and the relevance of the battery component in this whole context. Of course as a company that has invested billions in its own EU battery cell manufacturing and is continuing to do so we like the idea of stimulating market demand for sure. But we also have to see that we have one big, we have several goals that we want to achieve. We want our cars to be European, we want them to be more electric and we want them to be affordable.
And so we have to balance this out to a certain extent. That is why I was referring to the small car exception where it will be particularly challenging with European batteries and that is why I pointed out how important production-based output support for battery cell manufacturers is. And in full honesty this is a big bet on the EU upholding its promise, its idea of having a substantial funding for these European battery cell manufacturers to secure a European production base for batteries. And you have to have in mind that our big goal in the ramp-up of electrification is to reach cost parity. At a certain point we have to sell cars, electric cars with the same profit margin as ICE cars and we have to be able to sell them to the customer for a comparable price.
So that has to be balanced out. And in full honesty Mr. Lange you're the first one that I hear in this whole debate who says that the car company is hoping and can hope for higher profit margins because of the made in EU. The opposite is the case. We have to design this regulation to such an extent that the prices are not exploding and the profit margins are not further shrinking.
Big topic mentioned by several members is the methodology. In full honesty, we at Volkswagen Group have never been big fans of the value-based approach. We have always promoted a more strategic, targeted approach on those technologies that we really have to master and be able to produce in the European Union. But reality is the Commission proposal, which is based on a value methodology. And so we say as a car industry, and I think there I agree with most of our competitors, if you have a value-based approach, then show the full value of a European car.
And if European suppliers would build cars, there would be no European car industry, no European car maker. So obviously we bring something to the table as well as car makers with highly skilled personnel, with our production and with our R&D. R&D has been mentioned a couple of times and is indeed crucial. The tendency to source out R&D to other regions of the world is a very real one. And what differentiates us from competitors with a high import quota is that we actually have this big R&D operations in the European Union.
So we say, take the European value of a car, okay, but then make it the ex-works price of the whole vehicle, which includes components for sure, but also our own R&D and production costs. About the the unified, the one definition that has been mentioned a couple of times. Yes, of course. Of course we have not been happy to see that there are different pathways to different subsidies, so to speak. You cannot make our procurement department responsible for political horse trading.
So there has to be one unified definition of what makes a Made in EU car once and for all. And that defines then to have access to the respective purchase schemes, public procurement and other fields of implementation. So much for this. Geographical scope, of course, a fascinating debate. We all are very familiar to it.
My basic message is, don't make this a beauty contest of whom we like in the world and whom we don't like. This is about fostering European production. And so there has to be an approach that secures that there is a core EU content in cars. That is why we feel that our proposal of a 70-30 approach is quite an appealing one because you avoid this discussion about who's in and who's out. And Mr. Lange, I have difficulties to explain to my European colleagues why a car that has been assembled by colleagues in other world regions who earn three or five euro an hour gets the same Made in EU label than a car that has been produced by them.
So that is a question that we also have to answer. Geographical scope, I believe it is good to have an approach that covers the market reality as it is today. Today we have an import quota of around 26%. So if we as Renault, Stellantis and Volkswagen say, let's make it 70-30, that is we think quite a logical approach. Logic is the the final keyword.
Make this logical, stringent. EU value is the whole value of a European produced car. EU production means EU production. And to answer the last questions about the responsibility of the car industry.
To be honest with you, the old-fashioned way would be now for the car industry to come here and say, don't do anything at all. Let us source where it's cheapest. That's the only way to keep us competitive. And we are actually sitting here and telling you the opposite. We're telling you, you need these rules.
Be bold. Do it. Reflect the reality we are living in right now. And so I feel that is part of our responsibility. And just to clean up with the myth, we are still producing more than 90% of our cars for the internal market in the internal market as Volkswagen Group.
So it is not at all true that we are not committed to European production. Thank you.
Benjamin Krieger
Thank you very much. Also thank you for the many varied questions. There's a risk that responses may become a little bit repetitive. I will try to avoid that to the best of my ability. One notion that I heard in statements and questions I would like to address though.
What we are proposing as the automotive suppliers and what is I think also reflected in the proposed act for the Industrial Acceleration Act, this is not an embargo. We are speaking about incentives. We are speaking about incentivization of production in Europe, of creating value in Europe, of jobs in Europe. And where public money is involved, public procurement for example or subsidies, those should support European value creation. This is on the flip side, it's not an embargo.
If a car does not fulfill the made in Europe criteria, it will still be able to be sold in Europe. And maybe even cheaper. It will not have access to incentives. This is why I think it's also important to apply a bit of creativity in how to structure these incentives. Let's not go the way of other hard and fast rules where we pick technology winners.
Let's look for example in the CO2 regulation, the super credits. Why don't we use the super credits also for with a criterion for production in Europe for battery electric vehicles or for electric vehicles. Another notion that I would like to address is destruction or potential destruction of existing supply chains. That is not the idea. Again, what we propose is based on a snapshot of what we currently see.
When I speak about percentages of what can be produced in Europe, components that can be produced in Europe, that is the capacity that we see now. If I speak about what we currently see that is actually produced in Europe and built in vehicles, that is what we see in reality now. And this is what we would like to safeguard. It is not about the creation of new jobs. This is not about reshoring or taking something away from someone else.
That's not going to work. What we want to do, what we would like to achieve is stop the hemorrhaging of jobs that we currently see and the destruction of value creation in Europe. This is what I think is the strength in the idea behind the Industrial Accelerator Act. The inclusion of trade partners. You asked for what objective criteria could be used.
Sander used a very interesting thought which I took note of and I hope our team in the room too because I think it's valuable to look into it. We came up with a slightly different approach but again in the end it's about solving the issue in the best possible way. What we looked at is so a table with criteria. Criteria is integration in value chains, full FTA liberalization with the EU, market economy status, GPA agreement for public procurement and OECD membership to approximate countries which are close to the standards that we apply in Europe too. Those should be candidates for inclusion.
I said it in the beginning, not as a as a blank check, but on the basis of agreement with those trade partners. Last substantial transformation is not the right tool. Well, it is a tool that we have. Is it perfect? Probably not.
Is it only for tier ones? No, because we already see in what is a last substance sorry, last substantial transformation, we see the possibility to translate this into value add in Europe. That is one of the possible tests for last substantial transformation. The other one is change of tariff heading, it's very technical, I'm sorry, change of tariff heading or a specified production step in the EU. But in any case, this is more than simple screwdriver operations.
This is more than just the assembly of a knockdown kit, more technical terms again, I'm sorry, but it's it's not the simple step at the end of the value chain. That is not what is behind last substantial transformation, this is much more and therefore also much more powerful for the purposes of the Industrial Accelerator Act. Bureaucracy, I think it is feasible. Last substantial transformation needs in the parts of the value chain across the different companies needs to be looked at in any case. Pulling that data together is adding a step of additional work.
That yes, but it is less bad than inventing a completely new system. That's the strength of using an existing system. Again for bureaucracy, another one is let's try and use one methodology, one method, one definition across the different aspects of the Industrial Accelerator Act, not individual solutions, individual thresholds per aspect that we want to to regulate. I'm out of time almost. Mr. Delaus, you asked about 50% jobs in the EU whether this is okay.
Not my specialty area. There are six criteria for FDI. We need to make sure that four of those six are in place, are fulfilled, whether that's the jobs or the ownership or the joint ventures or the IP and know-how, the R&D, the workforce, that in the end we need to see what works best in that specific case. Again, we need to make sure that we incentivize, that we support value creation in Europe. In the end, the investments, we're not asking for money, the investments we need to stimulate by doing what I said before on the flip side of the medal, we need to make sure that the EU works and does the work to enhance its attractiveness as a location for investments where we have I think just as much to do as on the other side defining solutions to protect what we currently see.
Thank you.
Borys Budka
Thank you very much and last but not least, Mrs. Judith Kirton-Darling.
Jude Kirton-Darling
Thanks very much and thanks for the questions. So I got fewer questions, so I'll try and win you some time. But starting with the most direct one from Bernd at the end, of course, as trade unions, we're in constant dialogue with our partner trade unions around the world. I would reiterate the point that Benjamin, I think I made this point in your office when you asked me the same question bilaterally, so I make it in public now as well. The IAA is not an embargo, it's not blocking the European market for imports beyond, but where public money, public policy is there, it should come to support the value in Europe.
And I would reiterate there's some very interesting tables being produced by different think tanks, also by some of the industry associations about the use and the types of local content requirements which are already in place in many of our partner countries. Local content requirements are not a novel development. The IAA is not a revolution. We're just catching up and ensuring that we're leveraging the internal market to guarantee the quality of the internal market in Europe. And that's where some of the questions were about what kind of social conditionalities or social criteria are needed, and it also ties to why we talk about this scope of Made in Europe, which includes the enlargement countries, because that is a way that you can actually monitor social and environmental equivalence in a completely transparent manner, because each enlargement country has to report on the way that it is implementing European acquis on social and environmental standards.
It's completely neutral. It is an assessment which is done systematically by the European Commission. And as we've heard, the vast majority of our value chains are included in European, the European geographical area, but that gives it a quality which ties to quality jobs, to the kinds of values that we as Europe and the European Union are trying to implement in terms of our treaty commitments for improving living and working conditions, social cohesion, and a social market economy. So we should be integrating those values into the way that we leverage the internal market in our view. An assessment of the FDI social conditionalities there, I'm afraid I have to correct you, Benjamin.
There were lots of very interesting and important things that you said, but you made one error. In the FDI conditionalities, the social conditionalities are mandatory. Everything else is optional. Now, it's a debate whether other elements should be mandatory as well, but in order to really win the support of European workers for an agenda which is about ensuring that FDI coming into Europe, because we have to be clear, we're looking, an interesting report came out just today about the level of FDI from China and elsewhere into the European market. People know these rules are coming, flows of investment are coming, but that must be quality investment.
There's a lot of work which has been done by the OECD about the quality of FDI, and they've identified social criteria that you can tie to FDI. They've particularly focused on countries in Central and Eastern Europe for their analysis, but in order to ensure that you're actually delivering a net benefit for communities, for the economy, you're not creating extremely dangerous working conditions. We have reports on those. We have also some very good case studies of where FDI is coming in attached to social conditionalities, which is ensuring a just transition for workers in sectors that are under transformation and ensuring that that's done in the the various way possible. And if people want those examples, I'm very happy to share them.
We're doing that work together with our metal employer counterparts, CEEMET, analyzing good practices, particularly in the automotive sector, but also beyond, beyond. What we would plead for is that why do we only ask, and it was said very clearly, the Chinese FDI to comply with these social conditionalities? In our view, we should generalize social conditionalities across all of the instruments of the IAA. How we use public procurement, that's a debate which will start on the 9th of September, we know, but also in tenders for auctions, in in other instruments included in the IAA, there is no real logic to only reserve these conditions on social conditionalities for Chinese investments, but not for investments coming from elsewhere or how public money is used in other parts of of the IAA. Perhaps I'll stop there, but very happy to answer any further questions bilaterally or in future meetings.
Borys Budka
Thank you very much, thank you our rapporteurs, co-rapporteurs and co-shadows and of course our experts. And this is the saddest moment for me, but every journey ends, so my role ends just here. But fortunately, I will give the floor my dear colleague and best co-chair. So now it's time for IMCO chair, so the floor is yours and co-chair the next item.
Anna Cavazzini
Thank you so much. So you have all seen in the program, we have a second exciting panel after the first one. We are now concentrating on the question of lead markets because the IAA of course not only has the goal of keeping industry in Europe and having keeping a strong industrial base, but of course of also creating lead markets for decarbonized products because also here we need to increase the demand. And we want to check with the experts that are concerned, especially steel, batteries, I think we have hydrogen, we have to see what the Commission proposal has actually is bringing or what you want to correct or what are the impacts on your sector and to make sure that we have the best law possible at the end and have also a great discussion on it. So I welcome all of our experts for the second panel and it's the same procedure.
Afterwards, the shadows and co-rapporteurs will speak and at the end, if we have time, we can do catch the eyes. You can let me know if you want to speak at the end, but this is we are running a little bit late, let's see. So we start with our first panelist who is connected online. I welcome Ms. Emma Nehrenheim, Managing Director of the European Battery Alliance. Everyone of you has seven minutes, but please try to be really concise because then we have also more time for discussion.
So dear Emma, the floor is yours.
Emma Nehrenheim
Thank you so much. Thank you for the opportunity. I hope you can hear me well out there. First of all, I want to thank the European Commission for the incredibly ambitious text that the IAA represents. We were very pleasant when we read it the first time.
The ambition is absolutely great. Our industry, as you know, is a very rapidly growing industry. We represent products that are currently produced outside Europe to its vast majority of course. And we have been struggling for the last ten years to build a strong industry in Europe with heavy fallbacks in the most recent years. Remember that our industry represents the ability for us to bring renewable energy into the grid, to electrify the battery fleet as we heard from Volkswagen today, but also electrifying for instance mines.
And I think that we will see an incredibly fast growing industry when it comes to home appliances. And in the future, I don't think we can assume that we will buy any refrigerator, heat pump or whatnot that cannot sustain a electricity drop. I would like to call for the objectives of the lead markets.
For me, it's incredibly strong that we have said that public procurement and preserving the, the taxpayer's money by making sure that the, whatever we buy in, in Europe should be procured with local production and, so that we really appreciate. I would like to first call for the objectives, because we pretty fast fall into the discussion on the details, what countries should be in, how much should it be, what should be the price difference that we can accept and so on. But I think that there should be a strong statement that we go back to the objectives and the aims of IAA, so that we do not anticipate a future where there's a risk of this being pivoting into something that is not as strong as it was intended. We all know that markets, investors, and anybody that are involved in any kind of investment decisions are sensitive to insecurities. And this is exactly what we see right now.
It must be prioritized to create predictability for those who are part of growing this business in Europe, and that's really something that I would like to stress as part of this. What does that mean? It means a lot of things. First of all, it means that if you make an investment decision similar to many have done so far, you should know that the conditions and rules that have been presented should also sustain even if the market is changing. Our industry has seen batteries in price drops and how the behavior of the market and the buyers of batteries have pivoted and changed their strategies and now, fortunately, changing back.
But I really want to stress that we need to be sure that anybody investing shall know that their investment is protected as it was described in IAA. We've seen also on the positive side that we have already had investment decisions in the supply chain for, for the battery industry based on the IAA. So there is a strong commitment from the industry in case this falls through. So I really also want to say that and have it said. It's been mentioned and I also want to say it, that we are very generous on the, on the countries that we allow to be called Europeans.
And it's also been mentioned that maybe it's not the geographical area, but it's actually the conditions we put. And what I would like to, to lift here is instead of focusing so hard on who can be involved, we could also take the opportunity to, to put the terms to our industry. Not who, but how. And this is quite common in the global context that countries decide that, for instance, if we take part in business, we control our own IP, or we control the stake that we put in. And here I really want to emphasize that if not in IAA, somewhere we have to protect the investors and the industry in the same way and become the same escalation partner from the Commission's side as other countries globally are doing to their companies.
Because otherwise we will lose out in the negotiations of who controls the company, who benefits from the business, who controls the, the investments.
We have so many companies and so many research groups paid by public investments, paid by grants, that are investing heavily right now in bringing forward the next technology within Europe. And we just have to make sure that first of all there is a base industry that can evaluate and validate this technology, but also that this technology and IP and R&D stays a benefit and creates business for us. We talk about employment opportunities and jobs, job creation in Europe, but beyond that we also want to take part in the business, to take part in the innovation, to take part in the excellence and the knowledge. So there is so much more to it. I also want to comment a bit on the 20% price gap, which I find incredibly important to comment.
Emma Nehrenheim
All right. Okay, let's skip that then. I just want to make sure that also in Europe, for the companies that decide to invest and build in Europe, I also think we should set the terms. It shouldn't be up to each member state to just decide who can invest there and what to put public money on. I think it's important that we decide how we want to put the terms and that we protect our IP, our market, which is incredibly strong and important as several has already mentioned, and that we make our own business based on this.
Thank you.
Anna Cavazzini
Thank you so much. So our next speaker is Mr. Axel Eggert, Director General from the European Steel Association Eurofer. So welcome and you also have seven minutes.
Axel Eggert
Thanks Ms. Kalvasini, thanks chairs, thanks MEPs for this very timely invitation. And I have also a presentation and I would like first of all to say that the European steel industry has of course a huge responsibility to decarbonize. We are responsible for around 5% of the EU's CO2 emissions. And that's quite massive and we take this very, very seriously. We have committed to become carbon neutral by 2050 and we hope to do that or go close to 90% decarbonization much, much earlier than that by 2040, 45.
We have probably the largest program to decarbonize in Europe within energy-intensive industries. More than 60 industrial-scale projects which should become operational by the beginning of the 2030s to reduce 80 million tons of CO2. That is roundabout one third of our total emissions of the year 2018 on top of what we had already done before. So we are not only talking. We are really going ahead.
And therefore I would like to show some pictures. This is a construction site for the decarbonization of one blast furnace. The company has three. So this is massive. This is huge.
This one is in Germany. But we have across Europe, this one, the one before is in Scandinavia, in Sweden. And there it's going very fast now.
This one here is in Austria. I don't have a real picture, but they started the construction. This one again, left, electrolyzers, small scale, very small scale in Austria, right side, Germany. But we have projects constructing already in several other countries as well, such as, for example, Spain. So this is going fast, but we cannot decarbonize everything by 2033, we are obliged to by the current CBAM, ETS CBAM regulations, but we are doing our job.
And here you see the facilities, direct reduced iron, 27 million tons should be operational between today and early 2030s. 44 million tons of electric arc furnace capacity. So the DRI is mainly going into the electric arc furnaces to produce low-carbon steel, 44 million tons. But we have also, because of the enabling conditions, we have out of that about together 20 million tons of stalled projects. Still, we will have operational electric arc furnace running about 35 million tons by 2030, 32.
And that needs to have a market. If this steel is not having incentives, there's no business case. So the investment will be wasted investment, basically. So from that perspective, of course, we very much welcome the Commission proposal as a starting point. The lead markets should be established by that, but before I go to that, of course, electricity remains the key enabling factor.
Electricity supply, hydrogen supply at competitive prices. Without that, the transition will become extremely difficult for Europe. So now I come to the Industrial Accelerator Act. We have basically three points here to rise, or three key recommendations. We have of course more, but I cannot do everything today.
First of all, please include Union origin also for low-carbon steel into this Industrial Accelerator Act. So this has been left out last minute in the Commission proposal. It has been scrapped. So it should come back. The Commission's own impact assessment suggests that the Act could create demand for approximately 7 million tons of low-carbon steel.
This was calculated based on the assumptions of low-carbon steel made in EU. It is important to note that after the investments of the new steel trade, or after the implementation of the new steel trade measure, 18 million tons of steel imports will continue to enter the European market without any tariff, and these could easily absorb the 7 million tons that this measure could create in terms of lead markets for steel. So from that perspective, therefore, there is a real risk that the entire volume of low-carbon steel envisioned under the lead market could be met by imports rather than by steel produced and decarbonized in Europe. Secondly, we need a much more robust Union origin requirement for low-carbon steel.
To ensure the act delivers on its purpose, Union origin should be clearly and consistently linked to production within the European Union. We are not asking to amend the applicable rules of origin for non-EU countries, which would be incompatible with the EU's obligations under the WTO framework. However, instead, we recommend to follow the approach taken by the Council in its latest compromise. Applying the melt and pour methodology for steel produced in the EU. This methodology has already been introduced under the new EU steel trade measure and would therefore provide a consistent basis for identifying low-carbon steel produced in the EU.
If we do not apply the melt and pour to this, for example, a slab or intermediate steel product that is imported and slightly processed within the EU would be considered as European steel, undermining the same industrial and environmental objective the IAA is meant to support. Lastly, in point three, a more ambitious approach for lead markets is required. In addition to the made in Europe definition, the ambition of the demand-side target must be strengthened. Eurofer estimates that overall, the current lead market proposal will create demand of, as I said, 7 million tons, when the investments are ongoing for at least 30 million tons or 35 million tons by around 2030. So the lead market is not sufficient.
The current proposal foresees 25% share of low-carbon steel in public procurement. Our proposal is to go up to 50%, as has been mentioned before, otherwise it would only cover 5% of the EU steel market. And lastly, at the same time, the scope of lead markets should be expanded to the Net Zero Industry Act technologies. Wind energy technologies in particular represent a strong early market for low-carbon steel and the cost increase is really minimal, it's below 5%. Thank you.
Thank you so much for the clear presentation. We now have the chemical industry, Ms. Sylvie Lemoine, I hope I pronounced that correctly, Deputy Director General from the European Chemical Industry Council. Also welcome to you.
Speaker 39
Thank you, good afternoon. Thank you for the invitation. I should have slides. Probably I can already start. Anyway, good.
I was going to start with some context setting on the chemical industry because there's a lot of misunderstanding and then I'll go a little bit more into the, sorry, moving back to the first slide, I don't know what happened. Okay. The message here is the complexity here. So, like steel, like glass, like other colleagues, we are actually the orange arrows, we serve many, many markets. Each of these markets, whether it's pharmaceuticals, it's automotive, it's construction, textile, you name it, they all have their own dynamics.
Sometimes you have three actors in the value chain, sometimes you have ten. Some of the value chains are much more local, some are truly global. We talked automotive and so on. So we don't think that, you know, one approach will serve all value chains. There is an inherent complexity that we have to work with if we want it to be implemented successfully.
So complexity is the one thing, but there's also potential, of course, in the IAA. I also want to remind a bit the pressure points that we see in the sector. So what we would love all, I think, is in the middle: sustainable production, sustainable products, investments in Europe.
I'm, what we see is tremendous increase in costs, in particular as we heard from colleagues, energy, but also carbon cost and incremental regulation. Much more pressure from import, we talked about it. It's the time now to innovate and to invest, and invest massively. We're talking of hundred billions of euros before 2030 if we want to be carbon neutral in 2050. Investment have to take place in the coming years.
So it's massive, it's huge, but there is a missing link. The missing link is the demand, the demand in general, but the demand for greener products. Everyone wants greener, more sustainable products. For us, more sustainable means low carbon and circular, recycled, bio-based sources. Everyone wants those products, no one wants to pay a small premium.
So it's what I call the green premium dilemma, and this is where IAA has the potential to help solve the missing link, the demand side of things. So IAA is important, it can drive a market demand for greener products, but it's also, as we heard, not the silver bullet because you cannot have the demand side without addressing electricity and the cost side as well, and the support for investment. So I just wanted to be clear on that before zooming into IAA. A few data on the green premium, just that everyone knows what we're talking about. It goes between less than a percent to maybe nine to fifteen percent depending on the studies, the assumptions, the types of products we look at.
We are actually starting a new green premium study where we will look at specific products where we sell chemicals, like shampoo, but also window frames, where the chemical content is relatively high because we want to have clear data on what we're talking about, how much more expensive it would be and how we manage this incremental cost, of course. IAA, yes it matters. We're happy to see the chemical industry is recognized as a strategic industry. It does signal a change in industrial policy and this is very welcome. It's for the first time setting a practical toolbox.
We're discussing it with all the methodology discussion about how to create demand and how to implement made in Europe. But of course how it's operationalized will matter. And of course, as we heard, it makes a lot of sense to start with public money, taxpayers' money, and therefore focus on public procurement and public funding. So very much support this direction from our sector. Zooming into Article 16, public procurement for chemicals has some potential.
It's not all, but if you look at construction and automotive, which are in the scope of the IAA, all together public and private procurement is 22%. So about 40%, if I take construction, 40% would be public procurement. So it's not insignificant. It's a good starting point and we think it's good to start there, make it work, and we'll see if and how it can be expanded. There's three things that we think matter for chemicals.
It has to come from the end products, from the end market. For example, you start from a car, but to make it work, as we heard, and it's about this circumvention as well, you need to specify this particular part, this particular material in the battery. So if I take the example of batteries, you need the supplying value chain to be in Europe as well. So you would need to say cathode active materials, but also functional binders, electrolyte materials, these are all the components of the batteries, X percent in Europe.
Speaker 40
And this would be a way that the last transformation stage with the rules of origin actually covers the value chain because it's the last transformation stage of the plastic, of the component that is named. There's a bit of complexity, but this is actually the way Annex 2 and 3 are constructed and we think it's the level of specificity that is needed in the legislation. For chemicals specifically, the way Article 16 is written, it covers only low-carbon sources, so only circular materials. It needs to cover also low-carbon in line with the logic of the IA to decarbonize. And the rules for the implementation of Made in Europe have to be, and I would insist on enforceable, practical and enforceable, because we are good at setting rules, we're not good at enforcing them at our borders.
We have major gaps on enforcement and we need to be able to check the claims. So what are we asking for in order to take the time to get it right is a work plan, similar to what we have in the Ecodesign for Sustainable Products Regulation, where the Commission would be asked to say in year X we will cover this value chain, year X plus 1 we will cover this one. This gives us the time to do solid assessment and to make it work. One final word, I'll skip, one final word on the Made in Europe. For us, the Commission's approach is actually a good starting point that is in line with our history of free trade agreement, of openness.
I would argue largely in line with our European values as well to be open, but it has to be based on trust and reciprocity. Right? So if you give us the same access to your public market, then you're in. The question I would ask you is whether it's faster to do opt-in or opt-out, because the trade flows, the circumvention change very fast. And our ability to respond is very important.
So delegated act, yes, but think of that. Thank you very much.
Anna Cavazzini
Thank you so much. Thanks for your intervention. And last but not least, Mr. Jorgo Chatzimarkakis, CEO from Hydrogen Europe. The floor is yours.
Jorgo Chatzimarkakis
Many thanks for the invitation and also congratulations to all of us to having an IAA. It's important to do something for the European industry. And I really want to underpin what the colleagues before said. Steel, chemicals are basically products that can be transformed, decarbonized, greened, however you call it, on the basis of hydrogen. And I would like to elaborate a little bit on where we are there and explain which machinery is important to do that.
That's the electrolyzers. They split water into oxygen and hydrogen and deliver the hydrogen that the steel industry and the chemical industry would need. Hydrogen Europe has more than 600 members. That's maybe not surprising, but no Chinese. We have no single Chinese.
And I say this clearly because Bernd Lange earlier on asked whether this is China-specific or not what we are doing here. And we would say yes, definitely yes, because we have many, many partners and friends that are here, also in Hydrogen Europe, like Canada, Japan, Korea, etc. In China, we have specific problems. And ladies and gentlemen, I would like to cover very much this issue of strategic molecules, because you need it in steel, you need it in chemicals. What is that, a strategic molecule like hydrogen and its derivatives, and you should read that slide from the bottom, is something that makes us more resilient, because at the moment, you see the gas storage is quite empty in some member states and we could produce these gases, these molecules ourselves.
But in order to get there, the strategic molecules, and to create some energy sovereignty and more industrial capacity, we need to create these lead markets.
We need to have a focus on the technology that we use for these molecules, but we need also to enhance the demand. And this is what we are talking about here. This would then create European resilience. Does it cost money? Yes.
Does the current situation, urging, I see many German MEPs here, urging the German government to buy gas in few months at high prices like they did three years ago, that costs money as well. And we have here to understand it's better to become resilient ourselves rather than get into this situation of dependency. And our technology is definitely one that has still a competitive edge. So we talked about batteries before. Here we still, we clearly know that the focus is in Asia.
Electrolyzers still are competitive when produced in Europe. And that is why the made in Europe aspect, and I will elaborate very, very shortly on that, is so important. The leap markets as a concept now acknowledged in this IAA is so fundamental for us. But the devil lies in the detail. The definitions are not clear enough and we will elaborate that of course not in seven minutes, but later on in written.
And Europe remains globally competitive. This is also what Mario Draghi said in his report. He said clearly, here we have the advantage. Why don't we then, I'm not talking about protection, I'm talking about focusing on it. And let's not do the same mistakes like we had earlier on in photovoltaic, in battery and others.
Now, steel. Axel already elaborated on steel. There are different ways to make steel greener or to use transformation steel. Hydrogen definitely is one of them. How does a leap market work?
Can I give you a very concrete example? Those of you who use Deutsche Bahn and see how late it is would understand it mainly is about also restructuring the infrastructure, rail. So Germany at the moment is spending on 600,000 tons of steel for bridges and rail, 600,000 tons per year. What speaks against the minister who has access to the transformation fund in Germany, constitution was changed, to make here a clear say, this needs to be transformation steel. And it's there.
The 600,000 tons are covered. We have FID, so final investment decisions in the steel sector that cover this. And this is possible. So I would underpin what my friend Axel says, but we need to do it. Public procurement needs to go beyond the 25% that is in the IAA and it needs to be European Union sourced.
That's really missing. Axel said this. Then let's focus one moment on what is important in made in Europe. Christophe Grudler made a very clear reference to made in Europe. We are not asking the whole electrolyzer, the whole balance of plants, so the pumps, the cooling being from Europe.
But the very core of the technology, we call it stack, and Axel shows an electrolyzer. The stack as such, this is where we have the competitive advantage. And this is where we want to say if there is a public procurement project with European electrolyzers used, the stack has to be from Europe. And that is also in the Commission proposal. So we are very happy about this Commission proposal.
There is one thing which is not clear. UK, Norway, EEA, yes or no? Lots of confusion here. Please, we need clarity on that specific point. One last point is the FDI, foreign direct investments.
Here, hydrogen is not covered like all the other technologies by a dangerous takeover from Chinese, could happen. So please rectify this issue here. Then this refers to you, to the chemical industry, fertilizer markets. We are dependent on fertilizers from Russia. We see Strait of Hormuz blocking, makes fertilizer prices go up.
We can produce our own fertilizers with ammonia, with our ammonia route, and this also would be a lead market missing clearly in the IAA. So there's an fertilizer action plan, but not a lead market here, and we need that. Last point: infrastructure. Please don't forget if you want to supply steel companies, chemical companies with hydrogen, with these molecules, you need also to look into the infrastructure. I witnessed last week in my home region the first transnational hydrogen pipeline being built in Moselle-Saar between France and Germany.
It happens, hydrogen happens, but without lead markets it will happen not basically in Europe anymore, but in other parts of the world. Thank you very much.
Anna Cavazzini
Thank you so much, and as a German citizen you spoke to me with your examples about the Deutsche Bahn, no I'm joking. Okay, we come now to the round of rapporteurs and shadows and MEPs, and we start again with the three co-rapporteurs, so I start myself. But I can be very quick. To the steel, I can only say as like the three co-rapporteurs, we had a very similar analysis on your points. And I'm also especially happy that you yourself come up with higher decarbonization thresholds to make sure that the lead market is really a lead market and is also creating, you know, a sign of where the market should go, and for that we need higher thresholds.
So this is definitely something we're going to propose, but also all the other proposals. To the chemical sector, probably two quick questions. You said that you're happy with the setup right now because, I mean, probably to everyone again, the chemicals are not in the scope, but they are kind of in the scope in the future, to put it so. You are happy with this in-between state or you want to have something changed? This is probably my question to you.
And if we still have time, you mentioned the enforcement, again I asked for the first panel also on about circumvention. You heard my question, probably you can also comment on how you think enforcement could be improved or circumvention prevented. Thank you so much. And now we come to the ITRE rapporteur, Christophe Grudler.
Christophe Grudler
Merci Madame la Présidente, chère Anna, et chers co-rapporteurs. Donc merci d'abord effectivement à nos trois panélistes pour d'être présents et pour leur intervention. Je voudrais poser trois questions simples en fait, trois remarques simples. Première question sur la définition du bas carbone. L'accélérateur industriel, il renvoie systématiquement aux actes délégués sur le règlement écoconception, sur le règlement produits de construction pour définir ce qu'est le low carbon.
Mais pour la plupart des produits qui sont couverts dans l'annexe 2, l'acier, le béton, l'aluminium, potentiellement le plastique, ces actes délégués ne sont pas encore adoptés, ni même programmés à court terme pour certains. Alors comment garantir qu'on ait vraiment un accélérateur industriel, c'est-à-dire que ça soit opérationnel tout de suite et qu'on n'attende pas trois ans sur les actes délégués de la Commission ? Est-ce qu'on peut imaginer des systèmes transitoires, des labels volontaires, des classifications existantes ou un engagement d'adoption dans un délai contraint ?
Est-ce que c'est crédible pour l'industrie ? Deuxième question, c'est la charge administrative et le reporting. C'est un sujet important parce que l'accélérateur industriel il repose sur des critères d'origine, du contenu bas carbone,
des main specific components comme on dit. Ça exige une traçabilité très fine et évidemment les outils existants comme les règles d'origine préférentielle des accords de libre-échange, le code des douanes, est-ce que c'est suffisant ou pas ou est-ce qu'il faut un cadre nouveau à condition bien sûr que ça n'alourdisse pas de trop le dispositif ? On n'aime pas le administrative burden,
on veut des choses simples qui fonctionnent. Et la troisième et dernière question, c'est sur la cohérence sur les instruments de l'Union européenne. Parce que chaque secteur représenté ici est aussi couvert par le CBAM, par l'ETS ou encore par d'autres réglementations sectorielles.
Comment garantir que l'accélérateur industriel renforce ces instruments plutôt que de créer des exigences qu'on va qualifier de redondantes, voire de contradictoires des fois ? C'est particulièrement crucial pour les entreprises qui doivent gérer plusieurs régimes en parallèle. Voilà et peut-être pour finir une toute petite question complémentaire à Monsieur Jorgo, laissez-moi deux secondes chère Anna.
Je voudrais savoir si le stack d'électrolyseur, c'est suffisant pour garantir l'origine européenne. Si on reste fixé sur le stack comme composant, est-ce que ça suffit ? Merci Jorgo pour la réponse.
Merci.
Pierre Jouvet
Merci Anna. Merci pour votre plaidoyer qui doit en fait lancer une alerte à tous les députés d'avoir le courage de porter un texte qui sera enfin efficace. Vous avez raison les uns et les autres de rappeler la vitesse à laquelle la Chine entre autres va sur un certain nombre de secteurs, que ce soit sur la chimie, sur l'hydrogène,
sur la question de l'acier. Et on voit à quel point ce texte est absolument indispensable. Moi je voudrais vous interroger simplement et ça fera gagner du temps dans le débat puisque tout a déjà été dit précisément sur la question de l'acier bas carbone de manière très concrète. Le texte crée une demande à ce stade pour de l'acier bas carbone mais cette demande ne garantit pas nécessairement que cet acier sera produit en Europe. C'est d'ailleurs principalement la critique qui est émise par Eurofer et c'est une part minimale d'acier bas carbone dans certains marchés publics et dispositifs de soutien mais sans aucune garantie que ce produit,
que cet acier soit produit dans l'Union. Alors selon vous, en terme d'expertise, quelle est la condition qui manque aujourd'hui pour transformer cette demande en véritable signal d'investissement pour la sidérurgie européenne parce qu'on sait que ce sera un levier et un appel qui permettra de le voir ? Et est-ce qu'il faut simplement renforcer le critère Made in Europe pour l'acier ou aller jusqu'à réserver une part déterminée de la demande publique à de l'acier bas carbone produit en Europe ?
C'est indispensable pour qu'on puisse jauger jusqu'à quel niveau on va. Merci de vos retours.
Speaker 42
Merci beaucoup. Now we come again to the shadow rapporteurs from the three committees and start with Dick Roozing for EPP.
Dirk Gotink
Thank you very much chair. The concept of lead markets is a quite an elusive one. Every business I talk to I ask okay how much demand creation do you actually get from the IAA proposal and how much do you need in order to actually survive ? I'm not talking about growing, I'm talking about surviving.
And honestly, most of the answers I get are very disappointing. Yeah, it, we will not publicly be able to generate the demand is enough to, to, to make all the business in the steel, in the chemicals, in the hydrogen grow. It's as simple as that. There's not enough public money for that. But then I would ask every single sector to indicate to answer those same questions.
How much, how much demand is created on this IAA as proposed by the Commission and how much is that in comparison to your actual market size in Europe? Because that's a huge, huge difference. And yesterday, Price Waterhouse in Germany said the future of the steel business is in Europe is unsustainable. Why? Not because we're not competitive, because we saw a lot of the blast furnace evolution going on, simply because the CO2 emission price is going to double in the next 20 years and that is simply impossible to compete with all the other places in the world.
So we can all try to combat the symptoms of what we're doing, but we're also doing it a bit to ourselves. Thank you very much.
Now for EPP, Raul de la Hoz Quintano.
Raúl de la Hoz Quintano
Yeah, thank you very much. Two questions. The first one to European Battery Alliance. We all share the, the objective to create a real European battery industry, but talking about it, do you think the requirements for cells to be produced in Europe before 2030 will really help to accelerate investment or there's a risk that European capacity will still be insufficient and that this will simply become a compliance issue for manufacturers? And the second question for Eurofer.
You have asked for the introduction of a requirement of origin for steel, we can be agree, but in that case, what level do you consider acceptable to support European steel industry, but at the same time realistic for downstream sectors like, for example, the automotive sector? Thank you.
Thank you so much, also to all of you to be concise. Tomislav Sokol for EPP IMCO.
Tomislav Sokol
Thank you very much. Maybe just, just shortly to refer on what was said on EU origin because that was also part of the first panel. Of course, we need clear criteria, but it's also important that, that when defining these criteria, we also take into account the fact that certain countries which do not share our values can also be used as a way to bypass the whole made in Europe origin idea and, and make it possible, for instance, for Chinese products to use this backdoor to enter European market. So I think here that we should be definitely very careful when we devise these criteria. I think it's very important.
Concrete points on what Eurofer said, I support the idea of including steel in the EU origin. I think it's important, more, very important. And also I think we should be more ambitious. I here, I agree with Dirk that, that IAA in this format probably will not deliver especially create the demand that we want, but my conclusion from this is that we need to be more ambitious and not just discard it or be less ambitious. On including suppliers, I think it's also very important what was said about the chemical industry that also that EU origin does not only apply to the final, apply to the final product, but also all the inputs so that, that we cover the whole, the entire supply chain.
And my, my question to Iorgo, on what, so you mentioned industrial acceleration areas. We know that there is a lot of EU contradictory legislation which makes development of low, of low carbon, of green hydrogen impossible, like the RFNBO delegated, delegated act. So my question is, can we use industrial acceleration areas to actually make it easier for some of these rules to be more flexible or not to apply so that, that we actually make it possible to develop green hydrogen in these areas?
Anna Cavazzini
Thank you very much. We continue with the S&D, Kathleen van Brempt for INTA.
Kathleen Van Brempt
Thank you very much. To the four of you, I have a general, even more political question. Most of you I've seen also in my office, we had in-depth discussions, and I see again today full support for the proposal that is in front of us. And then after you give this support, you ask us for extras. You say we need more local content requirement, we need to combat circumvention, which I completely agree upon, et cetera, et cetera.
And I think we have an open ear and we will listen very carefully, but we need to keep first of all this legislation simple, applicable, transparent. So that is a challenge. But my question to all four of you, because all, not you personally, but within your sectors in the past went up to China to go and invest over there, profiting from low labor cost and badly protected people and also ecological consequences and so on. Is it possible for you and your members to take a responsibility for the future to stay in Europe and to make sure that these European values that you say you all subscribe, that you want to apply? Last question, well, it was one general question, sorry Chair, but it's a little bit the same what you asked Anna on SEFIC, because I really, you support, but you know the Commission proposes that you're the first sector to be considered next.
How do you look at that and what would be the timing?
Thank you so much. Jens Geier for ITRE.
Jens Geier
Tja. Wir scheinen alle dieselben Fragen zu haben, und wenn man dann relativ sp$t dran ist, dann muss man ein bisschen improvisieren. Ich habe eine Nachfrage an die Vertreterin von SEFIC und an den Vertreter von Eurofer. Ich hatte neulich die Gelegenheit mit Mitgliedern einer deutschen Handwerkskammer zu diskutieren, und am Ende kam die Frage, dass man oder die Bemerkung, dass man gro"e Sorge hatte in Bezug auf den IAA. Und dann habe ich zur$ckgefragt, ihr seid Handwerk, was habt ihr denn mit Industrie zu tun?
Und dann kam der Punkt, wir machen uns gro"e Sorgen, dass wenn wir, dass wir pl$tzlich Herkunftsnachweise erbringen m$ssen, wenn es um unsere Produkte geht, die wir bei einem $ffentlichen Auftrag zur Anwendung bringen. Also Baustahl bei $ffentlichen Bauvorgaben, aber Chemieanwendungen haben wir da auch jede Menge. Wie w$rden Sie eine De-minimis-Klausel sehen? Gibt es da irgendeinen sinnvollen Wert, den man ansetzen k$nnte, ab wo dieser Nachweis nicht mehr zu f$hren w$rde? Weil ich denke nat$rlich $hnlich wie Kathleen an Erleichterungstatbest$nde, aber an den Punkt, dass wir nat$rlich bei kleinen Mengen jetzt auch nicht den Industrieschutz unbedingt brauchen.
Wenn ich noch darf, noch eine Nachfrage an SEFIC. Ich habe wirklich noch nicht vollst$ndig verstanden, wie Sie zum IAA stehen. Also sind Sie mit dem, wie es da steht, zufrieden, sollen wir das nicht mehr anpacken, oder sehen Sie dringenden $nderungsbedarf in Formulierungen?
Anna Cavazzini
Vielen herzlichen Dank. Now we come to PfE, and if I'm well informed there's only one representative, so Jana Nagyov! for IMCO.
Jana Nagyová
Yeah, okay, thank you very much, Chair. Yeah, I'm speaking on behalf of my colleague Kl!ra Dost!lov! from IMCO. After I had prepared good question, a nice question, but the other colleagues already covered this, so I'd like to maybe ask only very short question and then to have short comment.
Concerning steel, I would like to know how many of the green steel production are already operational currently and whether they actually sell or are able to sell. So this is a question. And my comment is because I have heard, I spoke to businesses in Czech Republic. Czech Republic is well known for its steel sector as well, which is slowly but surely closing. There was a project for green steel in the area and just imagine, EIB, European Investment Bank, refused to finance the project for green steel even when it's supported by the Modernisation Fund.
So I am now asking how is it possible? We are creating legislation, we are obliging for green and at the same time our own bank refuse to finance such project. So sorry for length, but this was just something I needed to express here. Thanks.
Anna Cavazzini
Thank you so much. And now we move to ECR, Daniele Polato for INTA.
Daniele Polato
Grazie, grazie Presidente. Mi rivolgo a Eurofer perché come relatore ombra ho seguito il tema dell'acciaio. Nell'IA vedo tre criticità. Serve una definizione chiara di acciaio Made in EU. Il nostro non è affatto identico a quello dei paesi con cui abbiamo accordi.
Serve acciaio fuso e colato, melt and poured, in paesi europei per garantire che gli appalti pubblici e i sostegni diano effettivamente la priorità alla reale produzione in impianti europei. I criteri low carbon e EU origin vanno applicati all'acciaio e ai prodotti ad alta intensità di acciaio. Non possono essere trascurati nell'IA. La definizione di low carbon dell'acciaio è decisiva. Il nostro acciaio è naturalmente low carbon, ma serve un'identificazione non controversa.
Senza ricorrere a interpretazioni più elastiche, è essenziale basarsi sui criteri del JRC. Infine chiedo cosa modifichereste per evitare che i criteri dell'IA possano essere aggirati e quindi per permettere che questo atto dia veramente respiro al comparto siderurgico europeo. Grazie.
Thank you very much. Then I have Anna Zalewska for ITRE.
Anna Zalewska
I will speak Polish. Trzy pytania, trzy kwestie. Po pierwsze Unia Europejska zgotowała los przemysłowi. To znaczy poprzez swoje przepisy doprowadziła do takich wysokich kosztów produkcji. W związku z tym pierwsze pytanie, czy uważacie państwo, że stworzenie lead markets i próba podwyższenia jeszcze tychże kosztów spotka się z pozytywnym odbiorem rynku dla obywateli, Europejczyków, którzy już powiedzieli, że chcą być na wolnym rynku i wybierać co tańsze.
Po drugie jestem przeciwniczką aktu delegowanego w sprawie metodologii produktów niskoemisyjnych, dlatego że boję się Komisji Europejskiej, bo zacznie przy tym majstrować. A co tutaj jest do zmajstrowania widzieliśmy już przy pomocy aktu delegowanego w sprawie baterii.
Otóż istnieje ryzyko, że Komisja Europejska wskaże na kraje i spenalizuje czy każe zapłacić kary za to, że w państwach o wysokim, wysokoemisyjnym koszyku nie będzie można absolutnie produkować, mimo że będą to najczystsze linie technologiczne. I trzecia kwestia. Nie wiem, czy paneliści zauważyli otóż takie wydarzenie, że Unia Europejska, Parlament Europejski zwolnił na trzy lata Ukrainę z ceł na stal. Mało tego, już w jednym dokumencie Parlament Europejski zagłosował za tym na ostatniej sesji, zaczyna z propozycją zwolnienia Ukrainy z CBAM-u. I jedna uwaga do panelisty.
Nie, Draghi powiedział, że utraciliśmy konkurencyjność. Żeby ją zyskać, potrzebujemy 800 miliardów euro rocznie, których nie widać.
Mariateresa Vivaldini
Grazie, Presidente. Farò una domanda direttamente agli stakeholder che ringrazio per la, per i loro interventi. E volevo chiedervi, alla luce delle vostre esperienze, vorrei chiedervi quale condizioni mancano oggi alla proposta per trasformare realmente i lead markets in reali decisioni di investimento. E quindi se il problema sia il perimetro dei settori coinvolti, la prevedibilità della domanda, i criteri low-carbon e di origine europea, l'accesso all'energia e ai finanziamenti o ancora il rischio che nuovi obblighi amministrativi finiscano per ridurre l'efficacia degli incentivi. E soprattutto, quali di questi elementi sarà determinante per decidere se il prossimo investimento verrà realizzato in Europa o altrove.
Grazie.
Rudi Kennes
Ja, dank u, voorzitter. Ik heb een vraag voor meneer Eggert van de staalindustrie. Ik zal beginnen met een positieve noot. Ik ben heel blij dat u nog altijd een topprioriteit vindt om staal te vergroenen. Maar één van uw leden is ArcelorMittal en dat is een bedrijf dat ondanks honderden miljoenen aan overheidssubsidies nog altijd niet investeert in de productie van groen staal.
Deze investeringen zijn nochtans essentieel om de staalproductie in Europa te behouden. Maar zelfs honderden miljoenen aan subsidies zijn blijkbaar niet voldoende om sommige bedrijven te overtuigen de nodige investeringen te doen. Nu, persoonlijk vind ik dat sommige essentiële industrieën opnieuw in publieke handen zouden moeten komen om werknemers te beschermen en de Europese productie te behouden, maar helaas denkt de Commissie daar natuurlijk anders over. Nu zullen staalbedrijven met de Industrial Accelerator Act opnieuw financiële en regelgevende voordelen krijgen om hen aan te moedigen om eindelijk hun productie te vergroenen en in Europa te houden. Nu is mijn vraag: hoe gaan we er nu voor zorgen dat wat er bij ArcelorMittal is gebeurd niet opnieuw gaat gebeuren?
En hoe gaat u garanderen dat het overheidsgeld niet gaat gebruikt worden om de omzet eventjes te verhogen om nadien met sluitingen geconfronteerd te worden? Dank u wel.
Emma Nehrenheim
Hello everyone, I hope you can hear me better now. For the first question, if we think that the 2030 is a good target and if we think that the battery industry will recover and if it's helped by the act as it's written right now, I think it's incredibly important that we stay persistent. So I want to stress that we cannot continue swinging back and forth. I think that there can be methods for pressure release if needed. So that, that's my message.
Second question is on the simplicity, applicability and transparency for the market and whether we've, if we can secure that our industry will make sure that labor and health measures are met, obviously yes. This is why we're promoting the European battery industries and want to build a base industry in Europe. Our companies are homegrown and we really think it's important that we continue driving towards our homegrown industry that is also share-held by the car industry. So it lives under our regulations and we want to make sure that it stays that way. I think it's the best way to control it.
I think that the last question was back to Vivaldini on production support over time and how we stay persistent and how we ensure that the investors continue investing in Europe and knows what they're investing into. I think that the most important thing for the early decisions is of course that everything is bought and sold. I think that all the industry companies have solved for that, early contracts and take-or-pay agreements have been signed for the entire industry. What we have seen is that we in Europe cannot be fast enough when the market pivots and things are changing. And I think that what we need to show are good examples of how we in Europe can be fast enough to react if the market conditions change.
And I think that the production support is one really good example where I think we can show to the industry investors that we will be there for the industry in tough times. So I want to stress that we do have mechanisms that we can put in place. We just need to be a little bit faster in the implementation of those measures. Battery booster is another one that I think could be really helpful if we can show the industry and their investors and their customers that when we need to, we have muscles at hand. Thank you.
Axel Eggert
Thanks for many questions concerning the steel industry. Thanks a lot for that. First of all, of course, the IAA alone will not make the trick. And the European steel industry is the best example how this can be done. The Commission had adopted last year a steel and metals action plan.
If all the measures are really properly implemented, then this building blocks will make sure that investment is happening here in Europe. And as I said before, we are already investing massively. Billions of billions of euros are going into the construction sites right now. But of course we need all the conditions in place in order to make this investment not stranded investments. Then there was a question, definition of low-carbon steel.
By the way, we have a compromise within the steel industry. We will be able to send that to you if you're interested. You will be interested because it's part of this legislation here that of course recognizes the carbon footprint but also gives some years for the integrated route for flat products also to recognize the investment that is being done in the sector to decarbonize. The ecodesign delegated act in our view is the right place and put it mandatory.
That should come I think by the end of the year or so there should be a delegated act in particular for steel and some other products. So a fossil fuel free on the labeling will not be possible. For that we need hydrogen at convenient prices. It is a trajectory to that. So we need to start somewhere but over time and hopefully not too far from here we will go up to 90% or more emission reduction in the sector but it will not go overnight that's also clear.
Administrative burden in particular in the steel industry all the data is available. So we do not believe that there is a necessity to create an administrative burden if it's done right it can be implemented quite efficiently. Then just to go through my all the questions that were here. Yeah again also to Mr. Kennes we are investing by the way also ArcelorMittal is investing massively in for example Spain and France and in other places. But of course it's a big company and Belgium in particular and I live since 30 years in Belgium I have a Belgian wife and kids with Belgian passports it's a bit more complicated also sometimes.
I have three key companies in in Belgium all three are not investing or the one closed because of high energy costs the other is not investing currently because of high energy costs electricity costs and the third one is not investing in a new ETS brand new to replace imported slabs because of high electricity prices. So there's a problem which we need to solve. It is one of the key issues. It's not only concerning Belgium it's concerning many member states Italy Germany as well by the way. So this has is one of the key enabling issues.
It's the energy. So what we need for the lead markets need to give us the trajectory they need to create a minimum requirement for the steel volumes we are producing in Europe to make the trick to really decarbonize a full industry. And 5% of the steel market is not sufficient I think I have explained that. We need more we need double let's say 10%. We have the CO2 emission standards from passenger cars they are also steel provisions.
So if we put all that together I think this will could be sufficient it will be sufficient. But then the other building blocks again like energy have also to come over time. So I'm not sure whether I think I can stop here and if I missed a question I'm really happy to send it to you then by writing. Thank you.
Speaker 45
Thank you very much and with that I give the floor back to Ms. Allemand.
Speaker 39
Thank you. I think generally we are probably more cautious than some of our colleagues for the simple reason that when steel has something like I don't know 300 products something like that we have something like 10,000 just to give you a scale. That's the complexity I was trying to explain. So and and we are a very global industry as well. So we have globally integrated value chains so yes we think there are risks and that needs to be they they need to be factored in.
Is this administrative burden so on yes potentially but is it a reason for doing nothing no. So we do support the direction but because we're we're a bit cautious and we want to see how it works we say start somewhere.
Speaker 40
So start with where public money is involved. Let's design it, maybe have a review clause so that we can come back to it if something doesn't work, but start somewhere and grow. If it works, have the ability to grow. That's our general direction. Article 16, I apologize if I was not clear.
Two changes we would like to see. So what we're asking is the Commission to come up with a work plan within 12 months, as was done in the ESPR, the Ecodesign for Sustainable Regulation. So the work plan, the Commission work plan, will say by in two years, so by 2028, there will be a delegated act for chemicals in construction. By 2029, there will be another delegated act for chemicals in maybe pharmaceuticals, because it's a very different dynamics. And then which chemicals in which particular chain.
This is what we're asking. So the delegated acts would come later after we have a plan. The plan is there for predictability, but for also doing the right impact assessment so that all the information that is needed to see if it works is in, because of the complexity. That is the ask. The second ask is to include low carbon, because as written, it's only sustainable carbon sources.
If we focus on what we call sustainable carbon sources, it is basically bio-based material, it's recycled content, but these are actually our input materials. It's not what we produce. It's what we use as feedstock in our production. We think we need both, the feedstock, but then it's also about the packaging and packaging waste regulation, it's the bio-based content, it's all kinds of other legislation. So it's the feedstock, but it's also what we produce, the low carbon.
We're also suggesting to have a definition for low carbon chemicals. The problem is that now, right now, there is no agreed harmonized definition. So what we would propose is that again, by date X, maybe two or three years, I'm not sure exactly, but for now we have an X, we could come back to you on that, the Commission would come up with a delegated act defining low carbon chemicals, aligned with international standards, because we have some international changes going on, in particular the greenhouse gas protocol and the ISO definitions. So that's on low carbon, on circumvention. For us, it's the exclusion criteria.
If we see there is circumvention, and there are ways to, so if I take anti-dumping, we do face circumvention, and it's very fast. You have an anti-dumping, within one month, two months, you see immediately other countries being an away route, a way back to the EU. But there are a number of provisions in anti-dumping related to circumvention. So it's all about monitoring, tracking the flows, and this is why in the exclusion criteria, we're saying you need verifiability criteria. If you, third party, third country, you don't show, you don't play the game, you don't show your origin, if we see there's circumvention, this would be a criterion for exclusion.
But as I said earlier, the exclusion mechanism, and then if it's opt-in, it's opt-in, but whether it's opt-in or opt-out, the speed is going to be important, because the markets react extremely fast. One word on will it be enough to drive investments. So if I talk for the chemical sector, we have investment cycles of about 20 years, and we're talking billions.
So the market needs, I mean, these are multiple political cycles. In 20 years, you may have four political cycles and public spending, you know, comes and goes. So it is important to have some public support. What we call OPEX, so help subsidize electricity costs, for example. This is OPEX.
CAPEX support investment at start, so yes, it can help to de-risk the investment at the beginning, public support. But it will never replace the payback period by the market which takes place over the 20 years. And this is how the investors count. They look at what the market will pay back and this is part of the investment decision. So IAA can be part of that, creating this payback.
Yes, there is a risk it makes the products more expensive, choice to make. But it's not the golden solution, as we discussed before. It's also about the electricity cost, but fundamentally, investors also look at what is the market. So I think that I just wanted to specify that as well. I think I covered most of them.
Administrative burden, yes, something maybe worth reminding. The non-preferential rules of origin are up for revision. They will come early 2027. This is the opportunity to actually design them to be fit for the IAA. So I think there's a link there, you were talking about coherence of the different instruments and EU legislation.
So yes, it's important. Somewhere, and I'm sorry I didn't write the names, we were talking about avoiding duplication and the link with ETS and CBAM. Actually, again, there will be, you will be busy with the ETS revision in due course as well. Yes, we need an effective CO2 instrument, but the ETS revision with the conditionalities is asking commitment to invest in Europe. We will not be able to commit to invest if there's no market payback.
So actually, we need this mechanism, we need what I call the green premium dilemma. We need to solve that. If everyone wants the same products at the same price, green, without being willing to pay a few cents to pay back for the investment, yes, the investments will not take place. So that's what were a few, yeah. I hope I covered most of what you were asking for.
And oh, China, investment in China.
Okay, very quick point. If you can make the point, but... One word.
Speaker 40
It was primarily to serve local demand. Local demand in China was growing at 10% when we were at maybe 3%. So it's not always, we shouldn't think that we invest or global companies invest in China just to bring back the products in Europe. It's much more than that. What I hear in our sector, it was primarily to serve the local demand.
The problem now is that the China local demand is reducing. We have an oversupply and the products have to go somewhere. They don't go to the US anymore. So indeed, so but this dynamic has evolved over time and I wouldn't blame all the investment in China to be just an escape for costs in Europe because honestly, I don't think it's the case. It may be part of it, but the driver is local market.
I think that would trigger again a bigger debate, but let's, because we're really running out of time, let's still hear to our last speaker, Mr. Chatzimarkakis.
Jorgo Chatzimarkakis
Many thanks and I would like to answer first the questions of Mrs. Naguyova, Mrs. Salievska and Mr. Goting altogether, Mr. Goting with the PWC issue.
So first of all, there is enough green steel based on hydrogen that has been FIDed. So we have 2.7 million tons per year that can be produced, final investment decision has been taken. The 25% in the IAA would be 1.3 million tons. So you see it's half of what we can produce already. The capacity is there.
Pre-FID, so the next projects that have been already scheduled, we reach 6.6 million tons. So it's not an issue whether it is there. But it is an issue, and Mrs. Saljevska was of course clear to ask, that the production costs are very high. PWC also says production costs high, especially when you take the CO2 price. The point is that if we wouldn't have the production capacity, what are the costs for our society?
So it's a very simple thing. You can buy raw materials, you can buy the reduced pellets, the sponges with reduced iron ore from Mauritania, from Australia. You cannot buy the building capacity. You cannot buy the industrial capacity. That's our problem.
And if we take Europe and the industrial policy seriously, we have to cover this point and we have to balance out these costs. Then Kathleen van Brempt and Mrs. Vivaldini asked what is missing. Do you need any extras? We didn't ask for extras. We ask for simplicity.
What is missing is very simple. If you want us to stay in Europe, give us European demand. Why should I see my European fellow buy Chinese and then ask myself why our jobs are gone? Give me the demand, and the lead market is nothing else than creating a guaranteed and expected demand. This is possible.
There are so many social democratic ministers being responsible for infrastructure, for transport. They can do it. It's simple. And this is what we... we don't want extras. We want simplicity, and this is a very simple point.
Now, I would like to answer Christoph your point and Tomislav has left, but your points on administrative burden. To be... maybe I answer first the question on the stacks. Is the stack enough or not? Here we have to balance out. The stack is the sensitive thing we need to keep it European.
Otherwise, IP and the future job creation will leave. However, in order to keep the hydrogen production a little bit lower cost, we need to accept in the equipment of the electrolyzer, that's what we call balance of plant, so the pipes, the cooling, the building, we need to accept other issues as well. So it's balancing it out and we feel covered by the IAA here, that's why yes, it's good to focus on the stack. However, administrative burden. Dear colleagues, former colleagues, when I was here in that house, I always complained about the delegated acts because you delegate your power to the Commission and they do what they do.
And it's not building jobs, I can tell you. So we industry, we are suffering from delegated acts. This IAA, ladies and gentlemen, creates 28 delegated acts. Up to 28. Way too much.
Don't give up your power, please. Keep it here and then you can answer all these questions also Christoph very well made on contradictory issues to CBAM. Yes, they are there. But the Commission is also a silo-based monster. So they have also their silos.
There are contradictions and the delegated acts do not help.
So please be careful here and I would like to thank the chair and all the chairs. We feel well here with you because you really paid attention and we can see that you are interested. Our points are not extra demands. Our point is to fight together to keep the jobs in Europe. Thank you very much.
Thank you so much for this passionate final remarks and of course we are very interested. That's why we're here. I think everyone wrote everything down. That's why we want to have this hearing. We are technically running out of time but if the commission has one wants to add something for one minute.
Sorry.
Joan Canton
Thank you very much Mrs. Chair. I'm Joan Canton heading the unit in DG GROW working on the Industrial Accelerator Act and as you can see there are many of the silo monsters commission officials present in the room today. This debate triggered a lot of attention obviously on the side of the European Parliament and I thank also the quality of the interventions by the MEPs but also the quality of the interventions by the experts and the stakeholders for this very rich debate and as I said very useful also for the commission and for all the colleagues working on the accelerator on our side. In two words I think many things were said. On the on the side of the made in Europe aspects we do want to make a difference with this legislation.
So the ultimate objective and I think we all share it is to increase production capacity in the EU. The debate is how we do it and how we balance between administrative burden and effectiveness between core act and flexibility in the implementation through delegated acts or or else. The question of the supply chain dimension so making sure that we we address this along the supply chain because if we put requirements only some somewhere then the it can have negative impacts on the rest of the supply chain and trying to rely as much as possible on existing rules but with keeping in mind the need that they be effective. We want to work for the EU for European production but we also acknowledge that we will need to work with others with partners. We need to work with partners in reality and not only in words and that's one of the key aspects that we try to defend with the proposal regarding European requirements.
On low carbon towards it's a balance again between greenwashing and creating too high ambition. We want proposal and something that works that is realistic and we strongly encourage to continue to discuss this on the basis of project pipelines because the ultimate way of checking the effectiveness of the measure is to ensure that we have the pipelines the pre-FID the projects in Europe ready to supply what demand and public demand could cover with this with this initiative. And of course doing this while avoiding double regulation while avoiding inconsistencies wherever possible and finally again taking into account the complexity of supply chains. There is no point in designing ambitious objectives that are impossible to monitor impossible to check and therefore easy to circumvent and at the same time something that can be influenced by public demand since the choice has been made here to focus on what public demand can influence. Thank you very much for the debate.
Anna Cavazzini
Thank you so much and sorry for the very short frame you had but I think the experts were important here in the hearing to listen to them. So I give the floor back to the inter-vice chair Mr. Winkler for the concluding remarks.
Iuliu Winkler
Thank you very much to all the panelists all the experts for the very rich informations. Thank you colleagues for the very good debate. I think we have new dilemmas also not only new informations but that's the that's the art of it. So thank you very much all. Next step from the procedure point of view is the consideration of the draft report which will take place on the 28th of September.
Speaker 49
So with this, thank you and I close this session. Of course, colleagues from ITRE and IMCO are very welcome to stay for the next point, but if not, then they can leave. Dear colleagues, time is flying. We already lost five minutes from our next and last point of today's agenda. I'm addressing the INTA committee, so please let's start.
And the next agenda item on the International Trade Committee's... Dear colleagues, if you wish to stay, then please take a seat. And if you wish to leave, then of course it's your option. Thank you very much for understanding. There is a committee meeting ongoing.
So our last point for today's agenda is maybe in a way continuing the debate of how to make Europe a more competitive and more resilient place in face of global unfair competition and economic pressure. It is about a study. It is a study that INTA has commissioned while drafting the resolution on the role of trade in strengthening the EU's economic... I thank everyone for being attentive to this committee meeting debate. Thank you very much.
So it's about strengthening the EU's economic security. This was a resolution which was adopted by the European Parliament just before the summer break, as you remember. It underlines several very important aspects about the European Union's prosperity, which is tightly linked to international trade and investment, while at the same time its deep integration makes the European Union vulnerable to disruptions and economic pressure from third-country actors.
Iuliu Winkler
In order to tackle these sensibilities we deemed it essential to produce a study that would map recent cases of economic coercion directed at the European Union and also assess their impact from legal perspective on the recent anti-coercion instrument. I have online as I was informed due to an due to an airport mis-happening I have we have the two authors of the study online present in our commission's debate this afternoon. It is Lucia Taioli and Matteo Villa both are representing Italian Institute for International Political Studies. They have identified a quite impressive catalog of of economic coercion events against the European Union 41 instances of economic coercion and they have examined three of those in a particular focus the Chinese restrictions on rare earths exports secondly the United States pressure on the EU digital regulation rules and thirdly Indonesia's limits of the European Union dairy and alcoholic products. Of course after the presentation we will have a debate.
We are quite short on time. Dear colleagues Madame Taioli Monsieur Villa I am very sorry for your mis-happening but you have the floor now together for 12 minutes and please divide the time among yourself as you see fit. You have the floor please.
Lucia Taioli
Thank you very much. Thank you for the invitation to present this first draft of this study on strengthening the EU resilience. The study has mentioned has been conducted by some scholars at ISPI in Milan together with other scholars from Poland from Austria and from Germany. The study aims to highlight how economic pressure has been increasing vis-a-vis the European Union because the geoeconomic environment has changed. Over time we know that interdependencies have increased and this is a very good in terms of economic efficiency and overall welfare but unfortunately this increased interdependencies have been exploited sometime to put pressure on the European Union on European firms and on some of its members.
So interdependencies are an intrinsic element of economic transactions and economic relations but they are have used have mis-been misused in the recent years. So we consider within this environment the economic security doctrine that the European Union has been developing in the recent years and we focused especially on the anti-coercion instrument that has been developed more recently and we consider as has been mentioned a number of studies focusing on potential coercion and whether the instrument would be a good tool to face this circumstances. And we end up the study drawing some lessons and recommendations. Now we think that gathering a good database on the events that have occurred and on the studies that have occurred is important to better use