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The World Economic Forum in Davos this year was unlike from previous ones. Even while it could be argued that every year is “an exceptional one”, fewer Davos Forums have been hosted when under a significant armed war in Europe. What drives the interests in Davos for the EU? What economic issues does it face?
The opening of the Forum was marked by the Special Address by President of the EU Commission Ursula von der Leyen. She emphasized the importance for shift towards net-zero emissions is already causing significant changes in industries, economies, and global power dynamics. This transition is altering the way the EU works and is shaping the future of the EU industries. However, the true potential lies in the next few decades as we strive to reach net-zero. To achieve this goal, the EU President believes that the EU must develop and implement a wide range of new clean technologies across various sectors, including transportation, buildings, manufacturing, and energy.
The next few decades will witness the greatest industrial transformation in history, and those who lead in developing and producing the technology that will drive the economy of the future will have a significant advantage. The market for clean energy technology is predicted to reach a value of around $650 billion annually by 2030, according to the International Energy Agency. To stay ahead of the competition, Europe must continue investing in its industrial base and becoming more attractive for investment and innovation.
- The European Green Deal, NextGenerationEU, and various other initiatives have already provided unprecedented investment in clean technology across all sectors. Other major economies are also stepping up their efforts, with investment plans worth trillions of dollars to accelerate the clean energy economy. Together, the EU and US alone are investing almost $1 trillion to speed up the transition to climate neutrality.
- The second pillar of the Green Deal Industrial Plan aims to increase investment and financing for clean technology production. To maintain Europe’s competitiveness, it is necessary to match the incentives offered by other regions outside of the EU. To achieve this, the plan proposes temporarily modifying state aid rules to make them quicker and simpler to implement, such as using simple tax-break models and targeted aid for production facilities in strategic clean-tech value chains, to counteract the risk of relocation due to foreign subsidies.
- The third pillar focuses on developing the necessary skills to make the transition happen. The success of new technologies relies on the availability of skilled workers to install and operate them, and as the demand for clean technology grows, so too will the need for a corresponding increase in the skills and workforce in this sector. This will be a priority across all aspects of the plan, including regulation and finance, and will be emphasized during the European Year of Skills.
- Lastly, the fourth pillar aims to facilitate open and fair trade to benefit all. To achieve net-zero emissions globally, strong and resilient supply chains are necessary. International trade will become increasingly important as the transition to clean technology accelerates and more markets and inputs are needed for industry. An ambitious trade agenda is being pursued, including using trade agreements such as with Canada and the UK, and ongoing negotiations with Mexico, Chile, New Zealand, Australia, India, and Indonesia.
In conclusion, the Davos Forum highlighted the significant role that the EU is playing in driving global efforts towards a sustainable and net-zero future. The European Green Deal, with its ambitious targets and investment plans, is positioning the EU as a leader in the transition to clean technology and the fight against climate change. The industrial and economic shifts brought on by the net-zero transformation are already underway and are set to accelerate in the coming decades. The EU’s commitment to strengthening its industrial base and making Europe more investment- and innovation-friendly is also attracting attention from investors and other major economies who are also stepping up their efforts in clean technology. In this context, the EU is playing a key role in the global affairs, to achieve a sustainable and fair future for all.
Written by: Nenad Stekić