As the World Economic Forum in Davos focuses on the ‘polycrisis’, the solution is to see this as a time of ‘polyopportunity’ for investment
The congress centre, town and surrounding ski slopes promise a familiar backdrop for this year’s World Economic Forum in Davos, Switzerland. But the global context framing the debates among the world’s leading economists, politicians, business leaders and intellectuals represents uncharted territory.
The world has lurched from one crisis to the next, and it faces several crises all at once. “Polycrisis” is the most popular definition of this edition of the World Economic Forum.
In such times, our capacity to withstand or recover from such difficulties—our resilience—must be our focus. Yet how can we strengthen our resilience to so many complex challenges all at once?
The first step must be to get ahead of future crises. We were unprepared for the pandemic and, in many ways, we were also unprepared for Russia’s invasion of Ukraine and its energy blackmail. Strategic foresight that highlights our fault-lines and allows us to build resilience into the system through strategic investments before crises strike, will be the most powerful lesson to be learnt from recent events. I have called for a Government Chief Risk Officer before.
The second important step is not to confuse short-term fixes with longer term solutions or to mistake the cause of our problems with their solutions. The loss of Russian gas is not the fundamental problem; it is our dependency on it, which we have allowed to build up over decades, that we need to roll back. Decarbonization is not only indispensable to the climate and environment crisis, it is also the only way to ensure safe, affordable and secure energy for Europe and the world. For Europe, it would also strengthen resilience by limiting the scope for energy-price shocks to the economy and by neutralising its vulnerability to Russia’s energy blackmail.
Polycrisis is a time of polyopportunity
If every crisis is an opportunity and we are faced with so many, then this is the time of “polyopportunity”.
Higher energy prices create clear incentives to accelerate the green transition. But to take advantage of this opportunity, we need to enable firms and governments to respond to these incentives and invest. Unaddressed, high energy prices will become a burden on balance sheets and slow us down or even drive us into counter-productive policy measures. What is needed is a policy that uses the momentum of the crisis to address deep structural challenges and accelerate the energy transition.
As a long-term public sector lender and patient investor with considerable expertise and anticyclical investment power, the European Investment Bank Group can play an important role. Our support for clean-tech innovation today parallels our finance for offshore wind power twenty years ago, when there was insufficient funding at reasonable terms for a then-nascent technology.
We set the foundations for this vital green sector, and today we are doing the same for floating offshore wind, battery storage, and green hydrogen. Our clean energy lending in Europe in 2022 rose to a record high, and with our REPowerEU package we aim to support up to €115 billion in energy investment until 2027 on top of our significant regular lending operation in the sector.
Polycrisis calls for investment
The European Investment Bank and the European Investment Fund are also supporting emerging technologies such as artificial intelligence, quantum computing, cutting-edge health solutions, and advanced manufacturing. Without developing leadership in these and other areas, Europe’s competitiveness is at risk. The pandemic illustrated this dilemma in areas from vaccine production to semiconductors. We have not forgotten these lessons, and our work in 2022 demonstrates this. It was our strongest-ever year for venture debt deals, which primarily support growing technology companies. We need to continue to support EU strategic sectors, starting with energy – including grid development – with more and additional initiatives. More cannot be too much.
The third and final element to strengthening our resilience is cooperation. Global challenges require global responses. As a multilateral institution, we know this because cooperation is encoded in our DNA. Cooperation between countries, but also cooperation between the public and the private sector. Cooperation is built on trust and the European Investment Bank is a proven partner.
- We delivered on our commitment to channel 50% of our financing to climate action and sustainability in 2022, well ahead of our 2025 target
- We are well on track to meet our commitment to support €100 billion in investment for Global Gateway. This is not hot air. Our projects showcase how the European Investment Bank deploys its firepower to advance EU policies beyond our shores
- Along with other multilateral development banks, we are meeting the goal set in 2019 with respect to climate finance to less-developed nations, again well ahead of our 2025 target
The aim of the World Economic Forum is to foster a spirit of collaborative entrepreneurship that addresses global issues and shapes governmental, industrial and social agendas. This is an objective to which the European Investment Bank fully subscribes. It is in this spirit that we attend the Forum.
