Clean energy transition can unlock Europe's industrial potential

In the face of severe disruption in global energy markets, Europe must scale up funding to support an orderly transition and position itself among other industrial heavyweights in the new energy economy. In the IEA’s pathway for the global energy sector to reach net zero emissions by 2050, annual clean energy investment in the EU needs to rise significantly by 2030.

The ECB’s second economy wide climate stress test finds that frontloading clean energy investment significantly reduces medium-term costs and risks for firms and households. But besides geopolitical tension and high inflation, private sector investment faces a number of market barriers including policy uncertainty and lengthy permitting procedures that delay projects, deter investors and lead to cost overruns for developers.

European industry also finds itself at a competitive disadvantage regarding the price of energy. Compared with other regions, these prices are relatively high, and ambitious industrial programmes are being introduced in countries such as the US, China, India, Japan and Korea to build up domestic supply chains, resource security and manufacturing capacity. Accelerating energy transition investment will help Europe limit dependence on major fossil-fuel producers and often volatile fuel markets.

The EU has committed to spending at least 30% of its 2021-2027 budget on climate action. And development finance institutions such as the EIB have an important role to play in providing support for clean energy projects to crowd-in private sector engagement. For every euro spent by the EIB on its energy operations, it attracts a further €1.4 from the private sector. The EIB has already raised its financing for clean energy projects to unprecedented levels, and recently announced an additional €45 billion, on top of its regular lending volumes. This will go to supporting renewables and manufacturing in strategic net-zero industries to help accelerate the transition. Having already ceased all financing to unabated fossil fuels, the EU bank is well on track to support €1 trillion in climate and environmental sustainability investment this decade.

Read the article online at: https://www.hydrocarbonengineering.com/the-environment/02102023/clean-energy-transition-can-unlock-europes-industrial-potential/