Europe must double down on green transition

Arab News

28-02-2025

https://arab.news/mbsa3
Never has it been so obvious that Europe must stand on its own. But as European leaders debate how to do so, they should not fall for the bogus trade-off between security and competitiveness, on the one hand, and climate goals on the other. Doing so would squander one of Europe's major strategic advantages: its substantial lead in the transition to a low-carbon economy.
This advantage is not just a luxury for calmer times or a distraction from the pursuit of security and economic resilience. After all, energy is at the heart of Europe's security challenge. Dependence on Russian gas proved to be a critical vulnerability in 2022, triggering economic and political shocks that are still reverberating. Higher energy costs have constrained many EU member states' fiscal capacity — and thus their ability to invest more in defense.
In the three years since Russia launched its full-scale invasion of Ukraine, Europe has made positive strides in weaning itself off Russian gas. But while liquefied natural gas from other suppliers has provided short-term relief, it does not offer lasting energy security. This winter's colder temperatures sent gas prices higher again, highlighting Europe's continued vulnerability. Investing in more LNG infrastructure will not solve this problem. The LNG market, perpetually subject to cold snaps, supply disruptions and increased demand from other regions, is inherently volatile.
The only path to genuine energy security runs through the transition to a clean, domestic energy system based on renewables, batteries and related technologies. Such a system would stabilize prices for households and businesses while insulating Europe from external pressure.
Europe has already made headway on this front. Renewables generated 47 percent of the EU's electricity in 2024, surpassing fossil fuels, which fell to 29 percent — their lowest share on record. But we must maintain this momentum. No energy-intensive industry — including artificial intelligence — can hope to invest and scale up in Europe if it remains exposed to fossil fuel volatility.
The European Commission is rightly focusing on strengthening Europe's clean industrial base: the design and production of the materials and technologies that will drive both economic competitiveness and decarbonization. The EU's work toward a 'Clean Industrial Deal' represents a chance to position Europe as a global leader, not just a participant, in the economy of the future.
The only path to genuine energy security runs through the transition to a clean, domestic energy system
Laurence Tubiana
But given budget constraints, any new funds must be deployed wisely. That means emphasizing emerging clean technologies like batteries — a market projected to grow by 30 percent annually up to 2030. While China has a head start with its vertically integrated battery supply chains and advanced expertise, Europe still has a chance to compete and establish a strong position. Indeed, Poland is already the world's second-largest lithium-ion battery producer.
Europe's strategy must align with our values. The Clean Industrial Deal will be a test of the EU's ability to ensure that no region or community is left behind. The EU is at its best when helping member states bolster social and regional cohesion. It has a strong track record of managing economic integration, mitigating the downsides of globalization and fostering regional development through tools like cohesion funds. It now must devise bold social and employment policies (including retraining) to create high-quality jobs in all regions — especially those with carbon-intensive industries.
This will require strong cooperation among member states. A free-for-all of national state aid and industrial policies would deepen regional divides. Last year's Letta Report on the EU's single market proposed that member states contribute a fixed percentage of their state aid allocations to a common fund. Contributions in the range of 5 percent to 15 percent could generate up to €51 billion ($53.4 billion) annually, some portion of which could be allocated for clean industrialization.
Lowering Europe's climate ambition in the name of competitiveness would be a grave mistake. Companies across the continent are vying to secure a share of a global clean technology market that is projected to exceed $2 trillion by 2035. The EU Green Deal remains central to this vision, providing certainty for businesses by guaranteeing a growing market for their products.
Changing course now would significantly complicate matters, derailing countless business models and leaving Europe behind. Hence, some European companies have publicly warned against backtracking and many more, including several CEOs whom I have spoken to, express the same concerns privately.
The EU's sustainable finance framework is an important part of its strategy. As last year's Draghi Report on EU competitiveness emphasized, Europe's problem is not a shortage of capital but inefficiencies in how its abundant savings are allocated. Investors need high-quality, reliable and comparable corporate disclosures, including insights into climate risks. The sustainable finance framework might not be fashionable, but it is essential in providing this information. As investor groups managing some €6.6 trillion in assets recently warned, any significant backpedaling risks choking off European companies' access to finance. Thousands of businesses that are planning for and investing in a low-carbon economy would be undermined.
Lowering Europe's climate ambition in the name of competitiveness would be a grave mistake
Laurence Tubiana
Strengthening European strategic autonomy requires not isolation but interdependence. Although the EU's Critical Raw Materials Act rightly aims to scale up domestic mining, refining and recycling of the materials essential for the green transition, Europe will remain reliant on imports. Rather than chasing the illusion of total self-sufficiency, the EU should focus on deepening cooperation with reliable international partners.
Notwithstanding developments in the US, many countries still believe in working together on shared challenges. As Olivier Blanchard and Jean Pisani-Ferry argue, the EU, which embodies multilateralism, is well placed to organize an effective collective response to climate change and energy insecurity with like-minded partners.
By committing to an ambitious 2040 emissions reduction target of 90 percent, the EU can lead by example and negotiate new climate agreements with third countries such as Japan, Brazil, China and (possibly) India. China, in particular, has a huge stake in building a green economy, not least because it needs export markets for its enormous clean tech manufacturing sector.
Europe's climate leadership is not a burden but a strategic asset. Doubling down on the green transition will help secure its economic edge, strengthen energy security and reinforce its global standing. The choice is clear: we can lead with confidence or risk falling behind in a world that will not wait for us.
• Laurence Tubiana, a former French ambassador to the UN Framework Convention on Climate Change, is CEO of the European Climate Foundation and a professor at the Ecole Normale Superieure. Copyright: Project Syndicate