10-Day Countdown to Unshackle EU Cleantech: #Speed

Day 2?The countdown continues! For those catching up, each day until the European Council on 9-10 February, I’ll be sharing one actionable #idea a day that can help accelerate the #energytransition and make Europe a global leader in #cleantech #innovation and #deployment.?

The need for speed. Earlier today, the European Commission announced its 'Green Deal Industrial Plan' #EUIndustrialStrategy and – quite impressively – seems to have broken with the tradition of reinventing the wheel. Instead of repackaging money and announcing new instruments (with the exception of the Sovereignty Fund which I wholeheartedly support and have been calling for since 2019), the Commission announced that they will focus on improving their existing EU funds for financing clean tech innovation, manufacturing and deployment. Quote: “The Commission will work with Member States in the short term, with a focus on REPowerEU, InvestEU and the Innovation Fund, on a bridging solution to provide fast and targeted support.” They will also allow Member States to modify their existing recovery funds. This is a big step – why?

Yesterday, I wrote about simplicity. Today, I want to zero in on speed. In a race – and #cleantech by now is a competitive, global race – speed is all-decisive. That’s good news for those who can really double-down. But it can be detrimental to those who have deliberative processes, checks and balances, accountability in systems that are often deeply rooted in the post-war industrial (and fossil) age. Ever wondered why autocracies often have a competitive advantage in technology advancement? Because they can just spend funds as they wish, take greater risks, play for the long game without ‘interference’ in the form of electoral cycles or accountability to media, regulators (i.e. competition authorities) and other stakeholders.

To be clear and as my followers know fully well: I love #democracy, I cherish #freedom. That’s why I work to expedite and accelerate processes within the existing rules of the game.?And that often means that greater transparency or consolidation can be powerful tools. What do I mean?

As I know from my time in public policy, the EU already has an extensive amount of funding instruments for cleantech innovators. At a dinner I hosted last week, we had representatives of EIB, EIF, EIC, InvestEU and the Innovation Fund. And we additionally talked about the RRF, EIT and new plans for a Sovereignty Fund*. Confused? So were the #scaleup #entrepreneurs in attendance. That is why I am so supportive of a webtool that has been set up by Cleantech for Europe which is easy to maneuver and gives a helpful overview of existing instruments. Any entrepreneur can plug in certain criteria and find a suitable funding program. A one-stop shop of the various EU funding opportunities was long overdue and can still be expanded and improved but at least this is a start.

Or take the EU’s COVID recovery fund, #NextGenerationEU. According to the Commission’s website, it's ‘the largest stimulus package ever’, aiming for joint investments to the tune of EUR 806.9 billion. Preliminary data from the OECD Low-carbon Technology Recovery Database, which covers the G20, OECD, and EU countries, suggests that recovery money spent on climate mostly covers the adoption phase (around 85%), with the research, development and demonstration phase only accounting for 15%. That means that mostly existing technologies received support. That’s not bad per se but in the race to stand up new clean technologies and completely revamp our economy (think of the US’ IRA, Chips Act, Infrastructure Investment and Jobs Act), it may not be the way to go. The promise of NextGenerationEU was always that it would make ‘Build Back Better’ more than a slogan. That’s why it can be disheartening to see that the recovery and resilience plans of Germany, France, Italy, Spain, Poland, Belgium and Austria,?“focus on a small number of concentrated sectors and technologies”, ?as the Jacques Delors Institute showed in this 2021 analysis.

Another noteworthy aspect of the #OECD data is that the vast majority of recovery funding goes to transport and energy generation (mostly renewables, see above), significantly less goes to buildings and close to nothing to industry. But it’s exactly here where we need new technologies to reduce demand for (Russian) natural gas. In fairness, no one could foresee during the COVID crisis that the most serious #energysecurity crisis to ever hit Europe would follow on its heels. But now that we have this knowledge and live this reality, wouldn’t it make sense to re-orient the unspent recovery funds? The answer is probably ‘yes’. But coming back to speed, it would be so complex and cumbersome to redesign that it’s unlikely to happen, despite the evident need.

My overarching point is that it seems to me that we too often reinvent the wheel. Rather than make the most of existing instruments – those that are available today – we keep inventing new pots of money that are just shifting funds around rather than really creating new, fresh sources of money. To give you an example: in December 2022, a decision was reached to take EUR 12 billion out of the Innovation Fund (hello? does that make sense if we want to be leading in a global race for cleantech?) to channel into RepowerEU, the EU’s response to the energy crisis. ?

Bottom line: excessive complexity is the antithesis of speed. That is why it is so important – in addition to announcing ever more new plans – that the Commission also take stock of existing instruments and consolidate, as I hope happened today – kudos for trying because I know that politically it’s not very sexy. But it will make a tangible difference over time. As I often used to say when I worked in public policy: ‘we’re good at planning the wedding, less good at planning the marriage’. But that’s where long-term success and impact will become evident.

That’s a wrap for Day 2 of #unshackle #eu #cleantech #greendealindustrialplan #netzeroindustryact?

* EIB: European Investment Bank; EIF: European Investment Fund; EIC: European Innovation Council; RRF: Resilience and Recovery Fund; EIT: European Institute of Technology