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Why does the EU need a new clean investment strategy?

Publishing date
09 December 2024
Authors
Simone Tagliapietra
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There is no green transition without green investment. Stimulating investment will be the core challenge for the European Green Deal in the next five years, making or breaking the European Union’s chances of both achieving its climate targets and strengthening its competitiveness and security.

Getting additional clean investment during 2025-2030 to the level required to meet the EU 2030 climate target (in the order of 2 percent of GDP) is going to be arduous. On the one hand, clean electricity generation and electricity transmission systems need to be expanded, while industrial decarbonisation must be boosted and the green transformation of buildings and transport accelerated. On the other hand, policymakers face growing constraints on the public sector’s ability to support the necessary investments. Potential obstacles include the following: the end of the NextGenerationEU, the lack of a green carve-out in the reformed EU fiscal framework, the increasingly difficult trade-offs between decarbonisation, competitiveness and security, and finally, the false narratives on climate policy promoted by populist nationalist parties. The last two points are bound to be exacerbated by the return of President Trump in the United States.

As a result, Europe is not on track to reach its climate targets. It is at a juncture where political resistance to decarbonisation is mounting and where budgetary means to buy off consent are becoming scarce, at both the EU level (because the main source of financing is drying up) and the national level (because the fiscal rules leave little room for green investment).

In a new paper, Jean Pisani-Ferry and I discuss the investment needed in the coming years to achieve the EU climate goals. In addition, we propose measures to overcome or circumvent the imminent obstacles, pinpointing two distinct strands: the business strand, which consists of innovations destined to ensure credibility and the full mobilisation of savings, and the public strand, which aims to maximise the firepower of limited fiscal resources.

Read the Policy Brief 'An investment strategy to keep the European Green Deal on track' by Jean Pisani-Ferry and Simone Tagliapietra.

The Why Axis is a weekly newsletter distributed by Bruegel, bringing you the latest research on European economic policy. 

About the authors

  • Simone Tagliapietra

    Simone Tagliapietra is a Senior fellow at Bruegel.

    He is also a Part-time professor at the Florence School of Transnational Governance (STG) of the European University Institute and an Adjunct professor at the School of Advanced International Studies (SAIS) Europe of The Johns Hopkins University.

    His research focuses on the EU climate and energy policy, and on its industrial and social dimensions. With a record of numerous policy and scientific publications, also in leading journals such as Nature and Science, he is the author of Global Energy Fundamentals (Cambridge University Press, 2020) and co-author of The Macroeconomics of Decarbonisation (Cambridge University Press, 2024).

    On the basis of his policy and scientific production, Dr. Tagliapietra regularly supports EU and national institutions in the development of their public policies in the field of climate and energy, also through regular interaction with public decision-makers in EU and national institutions, as well as through regular parliamentary testimonies in the European Parliament and various national parliamentary assemblies inside and outside Europe, such as the French Senate, the UK House of Lords and the US Senate. His columns and policy work are widely published and cited in leading international media.

    Dr. Tagliapietra also is a Member of the Board of Directors of the Clean Air Task Force (CATF) and Senior associate of the Payne Institute at the Colorado School of Mines in Golden. He holds a PhD in International Political Economy from the Catholic University of Milan, where he previously graduated under the supervision of Professor Alberto Quadrio Curzio and where he also served as an Assistant professor (tenure-track) until 2024. Born in the Dolomites in 1988, he speaks Italian, English and French.

Keyword
WhyAxis newsletter
Language
English

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