Brief for the Renewable Energy Business

The von der Leyen Commission took office in 2019 for a five-year term (2019-2024) with an ambitious set of goals for the European Union, amongst which the European Green Deal, to become a modern, resource-efficient economy. Described as the EU’s new growth strategy, the Green Deal aims to transform the EU’s economy into a competitive and strategically autonomous one, where economic growth is decoupled from resources use and no one is left behind. Under this strategy the EU aims to become a global leader in the green transition and the world’s first climate-neutral continent by 2050, cutting emissions by 55 percent compared to 1990 levels.

In the past years, a number of interrelated challenges have highlighted that the EU’s ambition to pursue what can be defined as a green industrial policy is crucial to ensure that Europe maintains its competitiveness on the international stage, its strategic independence from other markets and that it fully benefits from the growth opportunities of the green transition, to maintain and strengthening its socio-economic model. The COVID-19 pandemic exposed the interdependence of the European economy, and the Russian invasion of Ukraine highlighted the need for the EU to diversify its energy resources, starting from gas, beyond phasing out fossil fuels.

The EU has now the opportunity to make the most of its economic recovery to achieve a more dynamic, resilient, and competitive market by investing in the green transition3. Renewable energy can both support Europe’s fight against the climate crisis and foster the emergence of a more competitive and independent economy. According to a report by Boell, renewable energy can reduce fossil fuel-induced price shocks and inflation, thus boosting European industrial competitiveness and easing household costs. Additionally, by switching to locally produced renewable energy the EU can strengthen local economies. The EU has the potential to meet its energy needs with domestic renewable sources, reducing its dependency on imports for its energy needs and thus also enhancing resilience to geopolitical crises.

Major challenges for the EU remain. These include attracting adequate investment that matches the innovation requirements necessary to achieve the EU’s ambitious goals in terms of renewable energy (42.5% share of renewables by 2030); the presence of slow and complex permitting procedures for renewable energy products; pressure from international competitors, in particular the US and China; and finally, the unavailability of skilled workers in the EU to match the speed of increased European capacity. According to EU official data Europe is currently a net importer of net-zero energy technologies: for some technologies such as solar photovoltaic technology, the EU’s dependency exceeds 90% of products in certain segments of the value chain and even in sectors where the EU industry is strong (e.g. wind turbines), the balance is deteriorating with increased energy and input costs.

Nonetheless, the EU can seize the opportunities to invest in net-zero and green energy technologies. The past two years have shown that the green transition can strengthen the EU’s competitiveness and that there is a great potential ready to be deployed. Between 2021 and 2022, the net-zero ecosystem doubled in value from over EUR 100 billion. 

Through a number of policies, including Action Plans, Strategies, and binding Regulations that are explored in this brief, the EU seeks to address these issues in order to achieve its competitiveness, independence and green transition goals. But what does the EU’s approach to recovery based on the green transition entail for green energy businesses?

With the mandate of the current Commission coming to an end this year, and the continued geopolitical challenges that the EU is set to face, this brief seeks to both explore developments in a number of policies related to the EU’s green transition and economic recovery and to define potential challenges (as well as opportunities) for green energy companies, both those in the EU and those seeking to enter Europe either by importing energy or producing it within the EU.

Read more in our latest report.