A New Chapter for European Competitiveness: Unpacking the Draghi Report on Energy and Sustainability

Draghi Report is clearly a call to action for immediate and coordinated efforts. Europe stands at a pivotal moment, and the next few years will be crucial in shaping our competitiveness in an increasingly digital and sustainable world. Decarbonisation and technological innovation are not just necessary for survival—they are opportunities to lead the next industrial revolution.

As Europe navigates its energy transition and strives for technological innovation, we face both significant challenges and opportunities. Our dependence on external energy sources and the urgent need to update our infrastructure are more obvious than ever. Recent global events—rising energy prices driven by geopolitical tensions and the impact of COVID-19 on supply chains—have only highlighted Europe’s vulnerabilities.

Historically, Europe has faced similar turning points before. The 1970 Davignon Report set a precedent for cooperation among the European Economic Community’s founding members, while the 1989 Delors Report laid the groundwork for our single currency. Today, the Draghi Report, unveiled in September 2024 by former ECB president Mario Draghi, presents a new vision for Europe—a vision that seeks to harmonise ecological ambitions with economic competitiveness in an era marked by unprecedented challenges.

Energy Key Proposals from the Draghi Report

1. Decarbonisation and Competitiveness: At the heart of the Draghi Report is a call to make renewable energy the foundation of Europe’s transition. By separating the remuneration systems for renewable and nuclear energy from fossil fuel prices, and advocating for long-term contracts such as Power Purchase Agreements, the report seeks to stabilise energy costs and foster a more resilient market. This approach is not merely about tackling the climate crisis; it’s about positioning Europe as a leader in clean technology. Evidence suggests that nations investing heavily in renewables have managed to cut energy costs by up to 25% over the past decade.
2. Self-Generation and Self-Consumption: The report advocates for a shift towards energy self-sufficiency, urging the removal of legal and economic barriers to self-generation and self-consumption of renewable energy. Such a shift could reduce dependency on external energy sources by up to 30%, thereby bolstering energy security and creating a more dynamic and innovative business landscape.
3. Strengthening Electrical Grids: The report also highlights the need for substantial investment in modernising our electrical grids. This is crucial for integrating renewable energy sources and ensuring reliable distribution. The European Network of Transmission System Operators for Electricity (ENTSO-E) estimates that an investment of €200 billion could increase the efficiency of renewable energy integration by 40%, supporting both our green transition and economic growth.

Technological Innovation and Global Competitiveness

Draghi’s report underscores an urgent need for Europe to bridge the innovation gap with the USA and China. It proposes a substantial increase in investments in emerging technologies, with annual targets set between €750-800 billion. This push for innovation is crucial for maintaining Europe’s technological edge. According to the European Commission, such investments could enhance our technological competitiveness by up to 20% within the next decade.

Reducing Dependencies and Enhancing Security

The report also underscores the need to reduce Europe’s reliance on suppliers of critical raw materials for clean energy technologies. By diversifying sources and strengthening supply chains, Europe could cut raw material dependency by 25%, ensuring more stable access to essential resources and supporting sustainable development. Also according to the report , EU has deposits of some critical raw materials, such as lithium in Portugal. Accelerating the opening of domestic mines could enable the EU to meet its entire demand for some critical minerals.?

Horizontal Measures and Governance Enhancement

Significant fiscal and governance reforms are on the table, including streamlining bureaucracy and revising competition rules to facilitate strategic mergers among European companies. These reforms are intended to drive technological advancement and improve our energy infrastructure, enhancing Europe’s position in the global market.

The Financial Challenge

The Draghi Report calls for a coordinated effort among EU member states to secure funding for both the ecological and digital transitions. It suggests an additional €300 billion in annual investments, combining public and private capital. Effective collaboration will be crucial in mobilising resources and ensuring they are used efficiently and sustainably.

Portuguese Business Perspective:

In Portugal, the Confederation of Portuguese Business (CIP) has warmly welcomed the Draghi Report. They praise its alignment with Portugal’s strategic goals, particularly its emphasis on energy self-sufficiency and technological innovation. CIP believes that these measures will not only enhance Portugal’s energy security but also stimulate local industries and foster innovation

The Draghi Report: What Should We Expect?

The Draghi Report outlines a transformative path for Europe. Its recommendations are set to overhaul our energy infrastructure, modernise systems, and elevate our technological standing on the global stage. This report is more than a set of proposals; it is a call to action for immediate coordinate efforts. As Europe stands at this critical juncture, the coming years will be pivotal in shaping our future in an increasingly digital and sustainable world. Decarbonisation and technological innovation are not just necessary for survival—they are opportunities to lead the next industrial revolution.

Now, more than ever, it’s time to build a future where sustainability and competitiveness are seamlessly intertwined.

Draghi Report: ?https://commission.europa.eu/topics/strengthening-european-competitiveness/eu-competitiveness-looking-ahead_en

Portuguese business group praises Draghi report https://www.euractiv.com/section/politics/news/portuguese-business-group-praises-draghi-report/