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Europe needs an investment plan to win the global cleantech race

14 March 2023 - Op-ed - By : Thomas PELLERIN-CARLIN

The adoption by the US of the Inflation Reduction Act gave new life to the global cleantech race. The EU must now learn three lessons from it, writes Thomas Pellerin-Carlin, the EU Programme director at the Institute for Climate Economics – I4CE


As anyone who has marvelled at professional cyclists vying for position knows, the decisions competitors take challenges the strategy of those following close behind.


Since August 2022, when the US Congress adopted a public climate investment plan of $400-800 billion as part of the Inflation Reduction Act (IRA), it’s safe to say the global cleantech race has moved up a gear.


The debate over the IRA’s impact on EU competitiveness has occupied policymakers for months. And rightly so – the International Energy Agency estimates the global market for six critical clean technologies will reach 650 billion dollars a year by 2030.


Responding to US efforts on cleantech manufacturing (including solar panels, wind turbines, batteries, and renewable hydrogen) will require the EU to capitalise on its climate policy leadership and develop a long-term investment plan to meet the financing needs of its cleantech industries.


The cleantech marathon

Cleantech investments do pay off. Not only by mitigating climate change but also with jobs and technological leadership.


Decades ago, Denmark invested in developing wind power technologies. Seizing its first-mover advantage, it now leads with a company like Vestas outperforming its US and Chinese competitors, hiring 30.000 workers, and generating €15 billion in annual revenues.


In the marathon that is the global cleantech race, the EU benefits from the most developed set of climate regulations and carbon pricing in the world. However, it lacks the investment plan that China and the US now have on offer.


The next logical step is for the EU to build a long-term investment plan that complements the other pieces of Europe’s net-zero industrial puzzle. Business leaders would also benefit from an EU Investment Plan that delivers a decade of certainty.


Read more on Euractiv’

To learn more
  • 09/15/2023 Foreword of the week
    From denial to acceptance: Europe’s next step in the cleantech race

    Psychologists sometimes talk about the five stages of grief: denial, anger, bargaining, depression, and acceptance. One year on from the announcement of the US Inflation Reduction Act (IRA), the European response has looked startlingly similar. Public anger in Brussels at perceived American protectionism. Private sector depression at the prospect of Europe falling behind in the global cleantech race. Denial of the gap between the EU and US efforts, by arguing that that all EU and national spending on cleantech amounts to a conservative estimate of what the IRA offers (while not factoring in the full range of US support). 

  • 09/13/2023
    The sharpest tool in the box: how to strenghten the European Union Innovation Fund for climate competitiveness and security

    The European Union (EU) Innovation Fund is Europe’s largest fund for climate innovation. It has a keyrole to play in European climate action, energy security and technological leadership. To unleash the full potential of European cleantech, greater public support is needed to help more companies and projects cross the so-called “valleys of death” that are inherent to cleantech innovation and scale-up. In this endeavour, relying solely on national public funds would create two risks. In countries where governments do not rise to the financing challenge, innovators will fail or flee. Conversely, governments with the fiscal means to spend big on cleantech may create a harmful subsidy race among EU member states, undermining EU solidarity and the integrity of the EU Single Market.

  • 09/13/2023 Op-ed
    Call for a European Green Industrial Policy

    We are coming to the end of this Commission’s mandate, time to think about the future of EU climate action. France and Germany called for a EU Green industrial policy last year but since then they have not yet show EU leadership. An EU policy needs to get 3 design elements right: Vision, Funding and Governance. In this OpEd, Stiftung KlimaWirtschaft and I4CE call for France and Germany to come together in leadership and, ahead of the EU elections, call for a European response to the great challenge of the 21st century.

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