Enhancing Europe’s competitive advantage in the transition to a decarbonised world economy
The Paris Agreement established a global goal of reaching net zero greenhouse gas emissions in the second half of the 21st century. As a result, the process of decarbonisation will pick up speed and profoundly transform Europe’s economy, which simultaneously faces a range of global technological, social and ecological mega-trends. With a more sustainable, equitable and prosperous world economy in prospect in the longer term, the shorter term ‘creative destruction’ inherent in the transition is already disrupting established markets, business models, mind-sets and expectations, as new forms of more sustainable growth replace those of the old economy.
The already substantial market for low-carbon products and services will therefore grow exponentially in coming years: By 2030, the New Climate Economy report estimates investment amounting to $90 trillion will be made. Companies who anticipate and innovate accordingly, integrating their decarbonisation strategy with their response to other mega-trends, such as digitalization and robotisation, urbanization and demographic change, will be the winners in this. This disruption therefore offers great opportunities for European industry.
The challenge to Europe is therefore to develop the depth and pace of innovation such that its companies succeed in both domestic and global markets. With other countries or regions of the world developing their own strategies, the European Union (EU) has recently seen a clear increase in political interest in the role of industry in developing a competitive as well as inclusive and decarbonised economy. Innovation policy has likewise drawn increasing attention in Europe and elsewhere as a key plank of successful economic development that achieves social and environmental, as well as economic objectives.
The question is whether the EU can effectively bring these two themes together, as the need for an integrated industrial innovation strategy, at European, national and regional levels, becomes more widely acknowledged. At present, Europe is still missing a clear and shared industrial vision as well as a coherent set of policies designed with the innovation imperative at its core. And it needs policies designed to meet the realities of 21st not 20th century industrial activity.
The European Climate Foundation (ECF) has launched the “Industrial Innovation for Competitiveness” (i24c) initiative, whose mission is to enhance understanding and confidence in how Europe’s industry can successfully compete and drive prosperity thanks to a systemic industrial policy focused on innovation. A key premise of i24c is that European industry will only be competitive if its strategy is consistent with deep decarbonisation as well as harnessing other mega-trends driving change such as digitalization and resource efficiency.
i24c bases its activities on research, multi stakeholder dialogue and high-level engagement. Its work is informed by a High Level Group of senior industrial, policy and academic figures. The ultimate aim is to build a public-private understanding of what a truly effective industrial innovation strategy should do, and to establish a compact that helps to deliver this in practice at all the relevant levels of decision-making, whether European, national, regional or city level. i24c also works with the OECD to ensure its work links with international activities too, and partners with organisations such as NER 400 and Industrial Carbon Capture and Storage.
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