Building blocks for strengthening Europe’s manufacturing base in cleantech

Background

Clean technologies are projected to continue expanding in turnover, investments and jobs. Thanks to ambitious climate targets, the EU is a global leader in high-value inventions and was an early mover in developing a cleantech production base. However, it has lost technological leadership in several sectors and its manufacturing base is eroding.

China has emerged as the global leader in cleantech thanks to clear targets for clean energy production, substantial subsidies, and internal market protections. Additionally, the US Inflation Reduction Act has intensified the urgency for the EU to accelerate its cleantech efforts. The EU’s cleantech competitiveness gap is driven by several factors, including unpredictability for demand, high energy costs, limited financing options, regulatory fragmentation, an uneven playing field, skill shortages, and external dependence on components and raw materials.

This opinion intends to formulate recommendations and actions to support EU domestic production capacities without resorting to permanent subsidisation. A cleantech industrial policy should deliver on the triple objective of decarbonisation competitiveness and resilience. Securing a competitive edge in cleantech manufacturing must be a core priority for the EU.