Summary
– Decarbonization and industrial competitiveness are key questions for the upcoming EU institutional cycle
– Europe is facing tough global competition in the automotive and battery value chain sectors, particularly from China and the United States
– Europe has the potential to be a global leader in clean technologies, especially in electric cars and lithium-ion batteries
– To achieve this, a smart green industrial policy is needed, focusing on targets, leveraging the single market, and increasing funding for innovative clean technologies
– The EU needs to stick to its set targets, enforce stronger sustainability criteria, and ramp up funding for clean technologies to ensure successful decarbonization and industrial competitiveness in the next five years.
Article
As the European elections approach, the compatibility of decarbonisation with industrial competitiveness is a key question. Julia Poliscanova from Transport & Environment and Simone Tagliapietra from Bruegel believe that a strong industrial policy is essential for Europe’s automotive sector, as one in four electric cars sold in the continent are expected to be built in China. Europe is also facing tough competition in capturing the battery value chain, with companies struggling to scale against China’s state support and US subsidies. However, Europe has the potential to be a global leader in clean technologies, especially in electric cars and lithium-ion batteries.
To achieve this, Europe needs to stick to the targets it has set for itself, such as the 2035 goal to phase out combustion engine sales. The European Green Deal plays a crucial role in providing a clear political vision and long-term policy for investment certainty. Europe has already seen significant investment in the EV value chain, but this could be at risk if there is uncertainty about the direction in the next five years. The focus should be on executing the vision by expanding the charging infrastructure, developing affordable electric car models, and creating domestic clean battery supply chains.
The EU should leverage the power of its single market by enforcing stronger sustainability criteria that reward local clean manufacturing. The Letta report recommends higher tariffs on electric vehicles from third countries if unfair subsidies are found, along with strategies to boost European supply chains and access to responsibly sourced minerals. The EU needs to ramp up funding for innovative clean technologies through a new EU Green Investment Plan, which could support the deployment and manufacturing of electric vehicle supply chains. Strategic procurement can also be used to fund projects critical for resilience and scaling industrial production at the EU level without excessive costs for government entities.
The next five years will be crucial in ensuring that decarbonisation becomes an industrial opportunity for Europe. A strong policy vision, supported by a European Green Investment Plan and a sharper industrial policy, is essential for Europe to succeed in the global market. With the potential to lead in clean technologies like electric cars and batteries, Europe must focus on executing its green industrial policies and leveraging the single market to drive competitiveness and sustainability in the automotive sector. By implementing these strategies, Europe can secure its position as a global leader in clean technologies and ensure economic competitiveness in the decarbonisation transition.
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