The first EIB Group Forum delivers a call for simple, fast investment in clean technology to overcome the crises facing the world
Europe needs simple, quick financing on a massive scale to build the clean technologies that will enable it to meet its climate targets, ensure its energy supply, and keep its best ideas from being snatched away by competitors around the globe. It’s a big challenge, but the green transition is also a great opportunity for investors.
Panelists at the first EIB Group Forum laid out their answers to the “polycrisis” that has hit the world in the last year with the Russian invasion of Ukraine, rising inflation and high energy prices. Over two days in Luxembourg, most viewed the big changes required to deal with the crises as an opportunity to reset the European Union’s economy, making it more resilient and inventive. Participants from outside Europe echoed the positive outlook with a call for partnerships with the Global South.
“The question today,” said European Investment Bank President Werner Hoyer, in the speech that opened the forum, “is what needs to be done, so that in fact the entire world emerges stronger from the current polycrisis.”
This inaugural conference drew major political figures from the European Commission and national governments, policymakers, business leaders and entrepreneurs. Under the title “Adapting to a Changing World,” panelists consistently called for new thinking about the response to the crises.
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Europewide responses to crises
Valdis Dombrovskis, executive vice president at the European Commission for An Economy that Works for People, laid out the scope of the challenges Europe faces. “On one hand, we are dealing with our long-term transformations like the green and digital transformations of the economy – and already there the EIB is playing an important role, having positioned itself as a climate bank,” Dombrovskis said, “and now we are dealing with war in Ukraine, where we need to provide massive support.”
A frequent call was for any response to be applicable across the European Union. “With every crisis we’ve had, the reflex is always the same,” said Yuriko Backes, Luxembourg’s minister of finance. “The reflex is always national, always protectionist. And after every crisis we see that the solutions are European.”
From policymakers, the European response most urgently needed was the completion of the capital markets union, which “will make sure we’re in a much better position to finance all the investment needs related to the climate transition and energy transition,” said Pablo Hernández de Cos, governor of the Banco de España and a member of the governing council of the European Central Bank.
A major new report by the European Investment Bank’s economists, released at the Forum, highlighted the impact of the crises on a European economy that already had some way to go in catching up to the United States and Asia. Chief Economist Debora Revoltella urged policymakers to create pan-European responses to the crisis, because “at the European level the playing field is already quite unequal.”
“The red lines that we have are the single market and our cohesion objectives,” agreed European Commission Executive Vice President Margrethe Vestager. “A well-functioning single market is worth billions and billions and billions of state aid. This can only be unleashed if we maintain our cohesion perspective.”
EIB Forum call for ‘simple and fast’ response
Against a background of economic difficulty, the engine of growth cited by every participant was also the one that will help counter the great challenge of climate change. “The basic principle most people in business seem to agree on is that the crisis should be in no way an excuse to dilute our climate ambition,” said Dmitri Papalexopoulos, chairman of TITAN Cement Group. “That train has left the station a long time ago. There's no going back.”
Papalexopoulos added that the European Union should learn from the US Inflation Reduction Act, which creates incentives for clean technology and subsidies for products made in the United States. “It is simple and it’s fast,” he said. “How can we in Europe go from controlling to enabling? From making sure everything is done right, to making sure it’s simple and can move as fast as it has to.”
A series of start-up and growth companies described the difficulty of financing climate technology in Europe—from XOcean, an Irish company whose marine robots provide data to wind farm operators, to Verkor, a French firm seeking to build a “Gigafactory” to manufacture batteries for electric vehicles. Verkor Chief Executive Benoit Lemaignan summed up the experience: “It’s the reality that the big, deep pockets are not European.”
Another battery maker, Christian Rood, chief executive of Einhoven-based LeydenJar, described how his firm started with a €300 000 loan from the Dutch government, while his US competitors got going with $5 million in venture capital.
“The lack of scale-ups in Europe has real consequences for the companies themselves,” said Ann Mettler, European vice president for Breakthrough Energy, an organization founded by Bill Gates to speed up sustainable energy innovation. “There are wider macroeconomic consequences, where hardly any major corporate players emerge.”
“There are lots of really good startups now,” she said, “but we haven’t cracked this problem with the scale-ups.”
Echoing Papalexopoulos’s call for a response as simple as the US Inflation Reduction Act, Mettler won the loudest applause of the Forum for her appeal for “speed, scale and simplicity. I want to call for a Complexity Reduction Act.”
The growth companies featured at the conference, each of which has received financing from the European Investment Bank, all specified that they wanted to remain European, while working with clients in US markets. This strategic autonomy – maintaining European ownership of European ideas – was stressed by a number of speakers. French President Emmanuel Macron described the European Investment Bank as “more essential today than ever before in helping us to build a sovereign Europe, a united Europe in command of its destiny.”
Value at the country level in Global South
Jutta Urpilainen, executive vice president for International Partnerships at the European Commission noted that the way European institutions and companies work with countries and companies in the Global South allows partners to maintain their economic independence. By contrast, some of Europe’s competitors provide investment that has the opposite effect. “Everyone is talking about strategic autonomy in Europe, but our partners also want it,” she said. “They want resilience and independence. And that’s how our offer differs from others.”
“China has created dependencies,” Urpilainen said. “That’s not what we want to do. We want to create value at the country level.”
The Global Gateway, the European Union’s programme to finance sustainable investment around the world, now has 80 flagship projects worldwide, she added.
“The EU has been very strategic in putting together the Global Gateway,” said Oulimata Sarr, Senegal’s minister of economy, planning and cooperation. “We believe that the future is green and that we cannot be left behind.”
Sarr hewed close to the Forum’s title in describing how her country has responded to the need for change. “Food sovereignty is now at the core of what we do as a government,” she said. “We used to get grain and fertilizer from Ukraine and Russia. Now we have gas and potassium, and we want to produce fertiliser.”
“Every crisis,” Sarr said, “is an opportunity for countries to reinvent themselves.”
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