Building Europe’s green industrial muscle
Key policy priorities to accelerate manufacturing of climate tech now Meeting global 2050 climate targets is heavily dependent on an industrial revolution to meet demand for climate technologies like batteries, renewables like wind or solar, and electrolysers which will transform our energy systems and industrial processes. Binding commitments made by the European Union to slash over half by 2030 have succeeded in securing Europe’s global leadership in climate action, but equally in securing the Single Market as one of the largest and most attractive open markets for climate technologies. The recent commitment by the EU to supply 40% of its demand for these technologies with products manufactured in Europe is a decisive move to capture the socio-economic benefits of these new markets domestically and a clear signal to climate tech investors. The investment opportunity is massive, estimated at a minimum €1 trillion over the next 6 years to reach 2030 objectives. EIT InnoEnergy’s portfolio of 200 start-ups and scale-ups alone will require €160 billion of new capital over the same period. The market for climate tech will only continue to grow as more industries decarbonise. Decarbonisation of just one energy-intensive sector in Europe like steel using hydrogenbased processes will drive an additional demand of 800TWh in Europe by 2030 (European Green Hydrogen Acceleration Centre, 2024), which is equal to the current electricity demand of France and Italy combined.
As a result, climate tech is fast becoming one of the fundamental drivers for economic growth for Europe over the next decades. To put this into perspective, the European climate tech market is today already estimated to be worth €120 billion per year (IEA, 2024). The battery and electric vehicle sector alone, has a projected annual growth of €500 billion and an additional 1.5 million jobs by 2030 (European Battery Alliance, 2024). But the window to capture this opportunity is short. Urgent and immediate action at EU and national level is needed as global – and unfair – competition increases and critical dependencies on third countries continue. The EU’s ability to scale green industrial capacity, enlarge and secure resilient, sustainable supply chains and access the necessary finance will be key to its success. The EU should prioritise: Speed in implementation and execution of agreed policy measures (Green Deal Industrial Plan), with resilience, sustainability, circularity and traceability of products at the core of its industrial strategy. Reallocation of existing budgets to climate technology manufacturing and new financial instruments to mobilize private capital, instead of search for more public finance.
1 | Building Europe’s green industrial muscle - Key policy priorities to accelerate manufacturing of climate tech now