EU crafts response to US green tech subsidies
The EU will present long-awaited proposals on Wednesday to counter sweeping US subsidies on green tech that threaten Europe’s industry, already struggling with soaring energy prices and unfair competition from China.
Faced with member states divided between free market supporters and state aid advocates, European Commission President Ursula von der Leyen is under pressure to urgently respond to the US Inflation Reduction Act (IRA).
– Why must the EU respond? –
The United States adopted the IRA last year, lavishing subsidies and tax cuts worth $370 billion for US buyers of electric vehicles — if they “Buy American” — and leaving European car manufacturers aghast.
European industry has sounded the alarm over the IRA’s impact on the continent, as high energy costs and US subsidies could push companies to leave.
Unlike their American counterparts, European businesses already face massive energy bills, unable to turn to cheap Russian gas after Moscow’s invasion of Ukraine.
Gas prices imposed on European manufacturers have tripled compared with the average for the past decade, while gas bills have remained stable in Asia and North America.
The EU has already committed to invest hundreds of billions of euros in green tech including solar panels, batteries and hydrogen.
The bloc, however, risks becoming dependent on Chinese companies that benefit from both massive subsidies and fewer environmental constraints.
“Many companies already relocate partially or totally their production outside Europe,” said BusinessEurope, the EU’s main business lobby.
Thousands of jobs are at stake in the chemicals, steel and other sectors.
– What are the available options? –
Mandated in December by EU member states to develop a European response, von der Leyen seeks to ease regulatory constraints weighing on green industries.
She has already announced plans for a new law that will make it possible to support strategic European projects, by speeding up and simplifying permits and financing.
She has also proposed temporary relief from state aid rules, targeted at those sectors affected by the IRA.
But the measure is controversial. It would help the bloc’s richest countries, especially France and Germany, since they could pour money into their businesses at the expense of EU competitors.
Germany and France represent respectively 53 and 24 percent of state aid notified to Brussels since March 2022 as part of the relaxation of rules following the war in Ukraine. Italy came in third, representing seven percent.
In a letter signed by seven countries including Austria, Denmark and Finland, they stressed that the bloc’s “competitiveness and better investment environment… cannot be built on permanent or excessive non-targeted subsidies”.
Some EU members led by France are calling for new common funds. Von der Leyen promised to work on a new European sovereignty fund paid for by an increase in the bloc’s budget.
But such a mechanism will only be possible with the support of Germany and other “frugal” northern EU members, which oppose joint borrowing or any increase to their budgetary contributions.
The EU’s single market commissioner, Thierry Breton, has suggested other ways to finance the response including the mobilisation of the 800-billion-euro European recovery plan’s remaining funds and loans from the European Investment Bank.
– When will the EU decide? –
EU members will decide on von der Leyen’s proposals during a high-level summit in Brussels between heads of government and state.
While there is consensus that there is a need to act fast, a proposal for a sovereignty fund will likely be pushed back to later this year as countries including Germany, the Netherlands and Sweden oppose it.
The extent of Wednesday’s package beyond easing regulatory pressures and relaxing state aid rules is uncertain.
There are real fears in Europe of a trade war with the United States, while many remain concerned about a response that violates free market principles.
The EU and the United States “have so much more to gain when we work with each other”, the commission’s three executive vice presidents wrote in the Financial Times on Thursday.
Valdis Dombrovskis, Frans Timmermans and Margrethe Vestager also called for “an open, thriving transatlantic marketplace” and warned of the risk to the single market of a “massive surge” in state subsidies.
The countries phasing out internal combustion engines
The European Union approved on Monday a deal that will lead to the phaseout of sales of new fossil fuel cars by 2035, with a final green light by energy ministers due on Tuesday.
The 27-nation bloc joins more than a dozen other nations which have set deadlines for ending sales of new cars with internal combustion engines (ICE) which emit toxic gasses that are a major driver of climate change.
– 2025 in Norway –
Norway is the trailblazer in ending the reign of ICE vehicles, with only zero-emission new vehicles — either battery electric or hydrogen — to be sold from 2025.
Norway is both Western Europe’s largest producer of fossil fuels and the leading adopter of electric vehicles: just under 80 percent of new cars sold in 2022 were electric.
– 2030 in Britain, Israel and Singapore –
Britain, Israel and Singapore plan to ban the sale of new vehicles with internal combustion engines in 2030.
In Britain, the measure is part of an effort to create a “green industrial revolution” that aims to create thousands of jobs.
– China drives forward –
China has taken a lead in the manufacturing of battery electric vehicles, with hundreds of companies making cars and generous public subsidies available.
Chinese firms also dominate the production of the raw materials used in electric batteries and their manufacture.
The world’s top polluter with the world’s largest auto market, China has set waypoints towards eliminating new fossil fuel cars. It aims for battery electric, hybrid and fuel cell vehicles to account for 20 percent of sales in 2025. It aims for them to account for a majority by 2035.
Local initiatives have also sprung up: several cities now ban the sale of fossil fuel scooters, subside zero-emission vehicles or have put low-emission zones into place.
– 2030 for US to get halfway –
According to President Joe Biden’s climate plan, half of new cars sold in the United States should be zero-emissions in 2030. Large subsidies are being used to protect local manufacturers and attract battery production.
Plug-in hybrids are included in that goal, however. While these vehicles have fossil fuel motors, they can run several dozen kilometres on their batteries.
Despite being the home of Tesla, the United States has a long way to go. Sales of purely electric vehicles represented only 5.8 percent of the market in 2022.
The states of California and New York plan to ban the sale of new fossil fuel cars, except for plug-in hybrids, from 2035. Canada has fixed the same objective.
– 2035 for the EU –
The Monday deal ends three weeks of drama following a last-minute roadblock put up by Germany and maintains an end of the sale of new fossil fuel vehicles from 2035, a key element of the bloc’s climate plans.
With vehicles required to be zero emission, even hybrids will fail to make the cut. Only new battery electric or hydrogen fuel cell vehicles will be able to be sold in the bloc, unless they are designed to use carbon-neutral synthetic fuels.
In order to satisfy Germany’s liberals, a carve-out was made for synthetic fuels, which are still in development but which are hoped can be made from CO2 using green energy, thus making their use neutral for emissions purposes.
Low-emission zones which limit access by older vehicles to city centres have also multiplied across Europe.
Fully-electric vehicles represented 12.1 percent of new car sales in the EU in 2022.
Within the EU, Ireland, the Netherlands and Sweden have set a more ambitious target of shifting to zero-emission vehicles in 2030.
– Japan –
Also a major car manufacturer, Japan plans to take its time to shift to electric vehicles and is favouring hybrids, of which Toyota is the world champion. Electric vehicles accounted for just 1.7 percent of new car sales in 2022.
The government plans to ban the sale of fossil fuel vehicles except for hybrids in the 2030s.
– Other pioneers –
India, which expects car ownership to boom but is already suffering from severe air pollution, has targeted electric vehicles accounting 30 percent of sales in 2030.
Chile, a major producer of lithium used in batteries, aims for 2035.
Biden bans US govt use of malicious commercial spyware
US President Joe Biden signed a ban Monday on government use of commercial spyware technology like the controversial Pegasus program, citing its use for political oppression in countries around the world.
The White House said commercial spyware poses a distinct intelligence threat to the United States and has been found on the phones of 50 US officials overseas.
In addition, a number of foreign governments have used it “to facilitate repression and enable human rights abuses.”
“Misuse of these powerful surveillance tools has not been limited to authoritarian regimes,” the White House said in a statement.
“Democratic governments also have confronted revelations that actors within their systems have used commercial spyware to target their citizens without proper legal authorization, safeguards, and oversight.”
Biden’s order was not a full ban on commercial spyware, but would apply to any program deemed a US security risk, or that is used for political abuse by other governments.
It also did not restrict spyware developed by US government agencies themselves, like the CIA or National Security Agency, the leading electronic intelligence body.
The most threatening software can scrape up all data from targeted devices with remote direction and control, according to a senior Biden administration official.
Last year the administration warned that it was planning tight restrictions on privately developed surveillance software after numerous cases surfaced of its use for political purposes in numerous countries around the world.
No specific names were cited in Monday’s announcement, but the US government has already taken action to prevent the use of several programs and companies seen as threatening.
In November the Commerce Department placed four spyware developers on its blacklist: Israeli firms NRO Group and Candiru, Positive Technologies of Russia, and Singapore’s Computer Security Initiative Consultancy.
Pegasus, created by NRO Group, was used by governments and other entities in Mexico, Poland, Spain, Hungary, Bahrain, India and elsewhere.
“There was an effort by commercial spyware vendors, like in other countries, to try to make inroads across the US federal government, and to market and to sell their tools across the federal government,” the senior official told reporters.
“So we purposely announced publicly that we would be pursuing this sort of ban.”
The ban was announced one day before Biden hosts his second Summit for Democracy, with leaders from 121 countries invited to join the three-day event.
The White House called the commercial spyware ban a “cornerstone” initiative for the summit.
The order “demonstrates the United States’ leadership in, and commitment to, advancing technology for democracy,” it said.
Artist Karla Ortiz sees AI ‘identity theft’, not promise
For artist Karla Ortiz, the explosion in artificial intelligence that can stand in for flesh-and-blood artists is nothing more than identity theft.
A native of Puerto Rico, Ortiz is a California-based designer, a concept artist and painter who has worked for videogaming giant Ubisoft, Marvel Studios, the Wizards of the Coast fantasy game publisher and has exhibited her work in galleries.
But now her profession could be completely disrupted by generative AI, the technology behind apps such as Dall-E and ChatGPT, which in seconds can crank out original content — illustrations, poems, computer code — with only a simple prompt.
About a year ago, Ortiz discovered Disco Diffusion, an open source AI-based image generating tool, but it is not easy to use for those less tech savvy.
At first, she thought it was an interesting experiment, but quickly she realized that the program was using the work of many of her friends without them knowing it.
They asked to have their work removed, but to no avail, and they backed down. She told herself art theft is nothing new in their line of work.
“It’s weird that this is happening, but whatever,” she told herself at the time.
But months later, with the introduction of even more powerful programs such as Midjourney and Stable Diffusion, which can generate images “in the style of” a chosen artist, she was brought face to face with the magnitude of the phenomenon.
Ortiz said she was shocked when she looked at how the programs were trained.
“All the training data, all the training material, it’s our work.”
In her studio, standing between her easel and her computer, Ortiz puts the final touches of oil paint on her latest work, “Musa Victoriosa,” a woman surrounded by eagles, brandishing a laurel wreath.
This muse, which will be used to illustrate a copyright protection app, embodies artists defiant against technology.
To those who argue that human artists also draw inspiration from others’ work, Ortiz says they are missing the point.
“Just because I look at a painting that I love, it doesn’t mean that I archive that influence and that it automatically becomes a part of how I paint,” she said.
“Influences can only get you so far in art,” she added.
“The rest is your training, your life, your experiences, your thoughts of the day; that extra bit of humanity that filters inspirations and experiences together and creates your own voice and work,” she said.
She worries about young artists who need the time and experience to find their style but will be squeezed out by AI.
– ‘Canary in the coalmine’ –
“How does a person break in now? And if you break in and you do develop a style, that’s wonderful, but what stops anybody from training a model on your work?”
Along with other artists, Ortiz filed a lawsuit in a California court against three generative AI companies, hoping one day to get the industry regulated.
This fight has strengthened bonds between creators, and not only designers, she said.
“I’m seeing more writers and also voice actors being very concerned because of the technology that can take your voice and mimic it perfectly,” Ortiz said.
Silicon Valley investors “want to expand to pretty much every creative endeavor,” she warned.
“Our profession was automated first so we kind of became the canary in the coal mine.”
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