Europe needs an investment plan to win the global cleantech race
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.