Halfway to 2030, the EU needs a climate investment boost
In a challenging geo-political context, Europe has a window of opportunity to lead on both climate action and industrial competitiveness. As Mario Draghi highlighted in his report last year, this can only happen if decarbonisation ambitions are backed by real investment – and there is an urgent need to boost those investment. The European Commission followed suit and pledged to be an “Investment Commission,” while reaffirming its commitment to implement the 2030 emission reduction targets and to stay to course on the longer-term targets.
Is Europe on track to deliver on its 2030 targets? With the second edition of our State of Europe’s Climate Investment, we take the temperature on investment in the climate transition in the European economy. While some progress has been made, investment in the energy, transport, buildings and cleantech manufacturing sectors continues to fall short. In 2023, climate investments in the EU reached 498 billion euros, well below the 842 billion euros needed on average each year to meet the 2030 EU climate targets, leaving a 344 billion euros gap.
And it is likely to get worse before it gets better. Early projections for 2024 suggest that investment in key sectors like wind power, buildings renovation, and electric vehicles are at risk of decline. Cleantech manufacturing investments are gaining ground, but production of EU cleantech facilities is falling short of demand, putting many of these assets at risk. Climate policy without sufficient investment will not deliver, and delaying action will make cost rise. The EU needs a better investment strategy.
The upcoming negotiations on the next EU multiannual financial framework (MFF) as a critical strategic investment budget offer an opportunity to move towards a long-term financing strategy for climate investments, providing predictability to private economic actors. Also, the National Energy and Climate Plans (NECPs) have potential to develop into genuine investment plans at the national level. They are gaining traction with the recent assessment by the European Commission that alignment with the 2030 targets is possible, if the plans are fully implemented. Our report aims to inform these public debates, reinforcing the evidence base with an independent analysis on the state of play on Europe’s climate investment.
