How can we boost Europe’s competitiveness?

It is no secret that the European Union risks losing its front-runner position in the journey to net zero. Arguably, it already has. To regain its place, it is critical to find out what the EU can do better.

This question, pitched by moderator Maive Rute – Deputy Director-General for Internal Market, Industry, Entrepreneurship and SMEs of the European Commission – to a panel of sector executives during European Sustainable Energy Week, evoked varied answers.

From innovation to regulation

According to Felicitas Riedl, EIB Director of Innovation and Competitiveness Department, the first thing to do when approaching the subject is to take a step back.

“We first have to understand what it takes to be successful or to drive the clean tech market. First and foremost, it’s to be aware that innovation is what drives it.

“About half of the technological solutions that are necessary to achieve the 2050 goals that we are set out to meet, do not exist or are not yet ready to be deployed to the market. This goes for renewable energy, energy efficiency but also sustainable materials.”

Riedl adds that while innovation is crucial, “we also need a tech transfer back to Europe in those areas where we have lost our competitive edge.”

Second, she adds, more infrastructure is needed.

Specifically, Riedl points to the need for updating and upgrading power grid infrastructure to ensure it is fit for purpose and establishing a network for electric vehicle charging, while equally looking at more attention to renewable energy and finding solutions for energy storage.

Then, there is the regulatory environment.

“In Europe what we are used to when compared to China or the US is a very fragmented environment.”

According to Riedl, a non-unified approach is a significant barrier to overcome and although “a lot of action has already been done in the right direction, we just need to further trigger implementation…”

She refers to the various policies underway in the European Union, such as the Net Zero Industry Act and the Critical Raw Material Acts, laws to enhance the Union’s manufacturing and reduce its reliance on imports.

“Last but not least, access to finance. We need to make sure that those innovative companies, those that bring us the solutions, remain in Europe, have access to the capital, are ready to scale up their solutions and [are fostered] within Europe.”

Also of interest:
Re-energising the Transition – Why Europe is at risk of losing its first-mover advantage in the energy transition
Global grids investment starting to pick up – IEA

Developing Europe’s unicorns

Whereas Riedl broke things down into segments of how to improve Europe’s competitiveness, Elena Bou of Innoenergy started by rather remembering Europe’s established position.

“I would like to highlight the privilege we have in Europe,” said Bou, a Co-Founder and Innovation Director of the Institute.

According to Bou, the Union marks a reference point in terms of regulation and its implementation. She refers to the early mover status the Union has to date, which is now at risk of becoming a redundant term with the advent of competitive powerhouses such as the US and China.

“What we can do is deliver the best business case for ‘made in Europe’ clean tech – a case of fair competition in the market and anchor industrial policy in aspects like resilience, sustainability, traceability and circularity.

“Price is not the only aspect and this is something that public procurement should take into account.”

Bou also called for a significant re-look at the realm of financing: “We need to prioritise clean tech and resolve one of the gaps: the financing of industrial startups.

“Industrial startups are a very special case because there is still risk but they have a big ticket. They need big investment. The typical VCs (venture capitalists) like the risk but they don’t like the big ticket. Commercial banking loves the big ticket but they don’t like the risks. So here we have a nice challenge that needs to be solved.”

Finally, says Bou, an environment should be fostered where Europe is responsible for the front runners, especially considering that of lot of these competitive players already hail from the Union.

“The last thing is to prioritise the transformation of energy intensive industry … let’s foster the front runners. We have the front runners in Europe.

“Europe is a region that has industrial unicorns”, she added, referring to startup companies who value over $1 billion, are privately owned and not listed on a share market.

“We have many front runners and I think we can support them to scale up. Especially now in terms of facilitating connections to the grid…

“The other thing is, why not [try] to have 30 of the front runners in the year 2030 made by Europe. Let’s be proud of them. And in that sense, one of the critical aspects is going to be the skills because the skills will mean competitiveness and productivity.”

Smart Energy International is a media partner to European Sustainable Energy Week (EUSEW), taking place from 11 to 13 June, 2024, in Brussels, Belgium.

Originally published on Enlit World.