The Potential Impact of the EU Competitiveness Report on Climate Tech

Wondering what the EU's report on "The Future of European Competitiveness" means for climate tech??

Climate technologies, innovation and investment are central to Europe's economic?future, as outlined in yesterday's report from Mario Draghi. It's encouraging to see recognition of the role green solutions can play in building an economically resilient and prosperous Europe, when public and private finance is mobilised at scale.?

The report calls for EUR 800 billion a year of investment in critical industries and markets to prevent Europe from falling behind. Investment would be combined with a comprehensive industrial strategy for Europe that prioritises sectors of global?importance.?

On clean technologies and climate solutions, the report specifically calls for:

Financing and Investment The report emphasizes the need for significant private and public investment to drive the green transition.?

• Mobilizing private capital through improved financial instruments and risk-sharing mechanisms
• Enhancing public funding, particularly for early-stage technologies and infrastructure
• Develop a basket of public financing tools including?decarbonization, including contracts-for-difference, blended finance, and regulatory asset base models?
• Creating a more integrated EU capital market to channel savings into green investments
• Streamline EU funding for clean tech manufacturing in the next Multiannual Financial Framework, offering companies a single point of entry with uniform application procedures

Regulatory Framework The report calls for:

• Streamlining permitting processes for green projects to reduce delays
• Earmark a larger share of Emissions Trading System revenues to support innovation in energy-intensive industries and transport decarbonization.
• Monitor and potentially improve the Carbon Border Adjustment Mechanism design during its transition phase to ensure a level playing field for EU industries.

Industrial Policy The report outlines using multiple policy levers to support a wider EU industrial strategy:

• Targeted support for strategic green industries, such as batteries, hydrogen, and renewable energy
• Introduce minimum quotas for local production of selected clean tech products and components in public procurement and contract-for-difference auctions to ensure predictable demand for EU industry.
• Ensuring secure access to critical raw materials needed for clean tech manufacturing.
• Establish industrial partnerships with third countries, including offtake agreements and co-investments in manufacturing projects, to secure supply chains and grow new markets.
• Evaluate support for Important Projects of Common European Interest (IPCEIs) in sectors like automotive to enable scale, standardization and collaboration in areas such as affordable EVs and autonomous driving.
• Launch industrial innovation projects for decarbonization challenges, such as demonstrators or IPCEIs

The report recognises that all of the above can only be achieved through public and private collaboration. As a new von der Leyen Commission gets to work, we're excited to see how these recommendations can be translated into action.

Download the full report here