Green industry: the game is kicking off

12 May 2023 - Foreword of the week - By : Solène METAYER

Faced with international competition exacerbated by the US Inflation Reduction Act, Team Europe (and longtime team member, France) is preparing its response. The team’s tactics tackle two challenges: greening existing industrial sectors such as steel or cement, and industrialising the production of green goods, particularly those cleantechs that will make the transition a reality, such as heat pumps or electrolysers. To meet the first challenge, the French government has put 5 to 10 billion euros of public money on the table to decarbonise the most polluting production sites, in return for private investment. But has the extent of the industrial investment needs been properly assessed?

 

In a study we are publishing today, available in this newsletter, we have analysed the investment needs of four heavy-industry sector in France. The study shows that investment needs vary by a factor of 4 depending on the decarbonisation scenarios selected! For example, a scenario with a very energy-sufficient and material-efficient economy requires less steel or cement, and therefore less decarbonisation investment. This highlights the importance of anticipating, planning, of agreeing on tomorrow’s needs, to avoid both risks of over-investment and under-investment.

 

To meet the second challenge, industrialising cleantech, France, with its green industry bill, and the European Commission, with its Net Zero Industry Act, want to speed up the granting of permits for the installation of new sites. This is essential. However, the French legislation is not focused on cleantech and thus fails to give it a comparative advantage. As for the European Union and its member states, they must invest in their institutional capacities to speed-up the permitting processes without cutting back on environmental safeguards. This is one of the proposals in our new blog post on the Net Zero Industry Act, which outlines how to make it a launch pad for a European Investment Plan for cleantech and climate. Greening industry and industrializing the green sector – two distinct challenges that need to be tackled simultaneously, with French and European policies working in harmony. It’s teamwork that wins matches.

 

Read the newsletter

 

To learn more
  • 07/05/2024 Foreword of the week
    After 5 years of the Green Deal, where is Europe on the road to decarbonisation?

    Following the European elections on June 9, the EU is adapting to a new, more conservative, political reality. Yet despite changing political tides, a new EU leadership will still need to find a credible answer to how the continent is to reach climate neutrality by 2050. To understand how to get there, we need a clear understanding of the progress already made. This is where the European Climate Neutrality Observatory (ECNO) comes in.

  • 07/02/2024
    State of EU progress to climate neutrality

    Assessing the state of progress to inform next steps in policy-making. The European Union (EU) is on its journey to become climate neutral by 2050. This multigenerational project holds many societal, economic, and environmental opportunities. At the same time, it is of unprecedented scale and implies considerable changes to the current systems, which need to be anticipated and addressed for the transition to be fair and acceptable to all. Regular progress checking is the key to understanding where the EU stands on the journey. It allows to identify challenges and opportunities and take targeted policy action guiding investment, supply, consumption, and societal development. There is still no official, comprehensive, and regular EU-wide progress monitoring to achieve this. This second ECNO progress check aims to close the current information gap. It provides a comprehensive view on the state of EU progress towards climate neutrality and identifies key areas of action for the next policy cycle.

  • 06/28/2024
    From Stranded Assets to Assets-at-Risk: Reframing the narrative for European private financial institutions

    Private financial institutions must rethink their approach to managing stranded asset risks. The current narrative on quantifying fossil fuel sector exposures within a limited scope of financial portfolios (mostly loans) largely underestimates potential stranding losses. As the low-carbon transition impacts all economic sectors, private financial institutions (FIs) must consider material transition-driven stranding risks within their overall transition risk management framework using a ‘whole of economy’ lens. Traditional risk management approaches are ill-suited to the methodological and quantification challenges of transition-driven stranding risks, so a flexible, dynamic, forward-looking approach is necessary. Strong, incentivising public policy coordinated with financial regulatory and supervisory impetus is necessary to preemptively identify, monitor and manage stranding losses on ‘assets-at-risk’ (i.e., potential stranded assets). The ECB finds that 40% of the total loan portfolio of euro area banks is exposed to energy-intensive sectors*, making them vulnerable to transition risks, including stranding. It is time for an urgent reframing of the stranded asset narrative to avoid significant financial losses (endangering financial stability) and direct orderly transition finance flows to retire or transform assets-at-risk before they become fully stranded.

See all publications
Press contact Amélie FRITZ Head of Communication and press relations Email
Subscribe to our mailing list :
I register !
Subscribe to our newsletter
Once a week, receive all the information on climate economics
I register !
Fermer