Published 1 hour ago
Submitted by Schneider Electric
Schneider Electric
Becoming climate neutral is a huge undertaking for anyone, let alone an entire continent. But that is exactly what the EU is doing. In recent years, the European Commission has been pushing ahead with ambitious decarbonization policies to create a more resilient Europe and become the world's first climate-neutral continent.
The goal was born in a time of multi-layered crises: the pandemic tested the EU's integrity, the invasion of Ukraine sparked a war on the EU's borders, undermining energy security and damaging the economy. Over the past five years, the European Union's growth rate has averaged 1% lower than the United States and is projected to remain about 0.8% lower in the long term. One reason is rising energy prices across the region: natural gas prices in the EU are still three times higher than in 2019 and about five times higher than in the United States.
To achieve its goals, the EU must first solve three energy problems: security, industrial competitiveness and decarbonization. These problems have one thing in common: the EU's dependence on imported fossil fuels.
This dependency not only damages the environment, but also comes with high costs, and opportunity costs: when the EU's energy import bill soared, more than 800 billion euros were spent on buying fossil fuel imports at inflated prices – by comparison, this is almost three times the EU's defense spending in 2023 – money that could have been used for the energy transition.
A Resilient Europe: A modern economy based on modern technologies
The demand side, i.e. how energy is consumed by end users, is a powerful lever towards decarbonization that deserves more attention. Here, we need to encourage the rapid adoption of both electrification and digitalization. Combining these latest technologies, industry can optimize its energy usage and accelerate the transition from fossil fuels to sustainable, affordable and secure energy sources.
With the Green Deal, the EU has put in place a good framework to address the energy challenge, but there is still a long way to go: for example, around 75% of European buildings are not energy efficient and only around 1% are retrofitted each year.
The renewed EU institutions must focus on managing the demand side of the energy sector, while ensuring that the “green” transformation of society does not undermine competitiveness. For these institutions, we propose three priorities to build a more resilient Europe:
1. Accelerating the energy transition.
This is key to ending dependence on fossil fuels and promoting affordable, low-carbon energy sources. The Green Deal is just the start, but further action is needed to unleash the power of electrification on the demand side. Research shows that, across all sectors, the share of electricity in the EU's electricity mix could more than double to 50%, with technologies already available at large scale. We need to start with buildings, industry and the electricity grid.
2. Prioritize digital transformation.
The global economy is becoming increasingly digitalized, but the EU still lags behind the world's two biggest powers, the United States and China. Digitalization could help decarbonize the EU's energy system and develop new economic activities.
In particular, digitalisation enables advanced forms of energy efficiency and directly supports greater circularity at scale. Digital transformation, combining sustainability and digitalisation, must therefore become a core EU policy, especially with regard to industry and infrastructure.
3. Simplify sustainability policy frameworks.
Europe's ESG efforts aim to drive innovation and the energy transition, making the continent a hub for sustainable technologies. The recent political cycle has seen important legislation to prepare for the 2050 climate targets, including a sustainable finance package that takes into account broader social and environmental impacts. Going forward, it will be important to refine regulatory frameworks to strengthen European leadership in sustainability policy and drive real change beyond reporting.
I am optimistic about the future. The EU boasts prominent industry leaders, strong local R&D and manufacturing capabilities, and a wealth of talent in leading universities. With the right strategy, the EU has the potential to overcome its energy challenges.
Read the full report here.
Schneider Electric
Schneider Electric
Schneider Electric is a European multinational company providing digital energy and automation solutions that deliver efficiency and sustainability.
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