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The Green Deal: An Industrial Revolution Against A Deadline by Schneider Electric

Bertrand Deprez

Download the whitepaper: How SF6-free and digital empower electricity decarbonization and efficiency  here.

The European Green Deal will have to foster major shifts in the European industrial structure. Shifting economies from brown to green would be a major, historic socio-economic transformation.

Not by coincidence, this challenge is often referred to as an “industrial revolution against a deadline”, as stated by the EU think-tank Bruegel. In this context, the upcoming industrial strategy, that the European Commission shall present at the end of April, is of uttermost importance.

The fundamental issue for Europe is that its economic power is suffering from the combination of two factors. Firstly, a relative industrial decline vis a vis the rest of the world (the share of manufacturing accounts today for less than 15% of the EU GDP, compared with 20% thirty years ago).

Secondly, according to McKinsey Global Institute, “Europe a century ago was the global powerhouse of innovation, but it has largely lost its edge[1]”.

Data points show that Europe has been comparatively slow to adapt to the Global economy’s digital transformation. Late 2017, only 24% of enterprises had adopted big data analytics, 16% had integrated robotics and automated machinery, and only 5% were working with Artificial Intelligence or 3D printing according to a report by the European Policy Strategy Center. While half of the top 10 manufacturer of solar cells were coming from Europe in 2001, there has been none of them since 2018.

At the heart of Europe’s problems is its own fragmentation, a multitude of green industrial policy initiatives, undertaken at regional, national and EU levels. These initiatives are generally not coordinated and may even conflict. A green industrial policy that is smart, targeted and harmonized across Europe, would help to stabilize European industry and make Europe a technological leader in carbon-neutral processes and products.

Europe has many ingredients that could contribute to building a leading position in the fields of environment and energy transition — expertise from its engineering base, significant funding and the clear political will to drive change. Europe is still home of many global leaders in green technologies (turbine manufacturers, power sectors, energy management, circular economy, car industry etc.).

European governments are also rapidly ramping up their level of support – the combination of strong regulatory incentives (the EU Green Deal) and funding supporting schemes (the EU recovery plan, 37% of €750b to be available to power the Green Deal) is going to make a difference. For instance, Europe is increasing its investment in battery production – more than 30 gigafactories are planned in Europe by 2030 (and more should be announced) but it is still far from the Chinese target (about 140 gigafactories).

The Green revolution is a huge task and is extremely capital intensive. According to the European Investment Bank, achieving 55% CO2 reduction by 2030 would cost an additional estimated €350b per year[2].

The EU can be the transformative power of its industry by looking at three complementary areas.

First, the EU must work closely with stakeholders (private sector, trade union, regions) to both accelerate the path to decarbonization and the level of integration of the EU single market within the field of sustainability. European Alliances have proven to be a successful model, especially when combine market and regulatory schemes (e.g. such as with Europe’s battery initiative).

Second, green industrial policy needs innovation. Around the globe, traditionally strong industries are losing out to tech start-ups. Opportunities are greatest for those who master a more “systemic” presence across sectors such as energy provision, modern transport and mobility, or food production. Europe must support market players that provide key technologies deployment (e.g. Battery, distributed generation, circularity, digital) and new business models (e.g. IIoT platform, services).

Last but not least, it is important to strengthen Europe’s value chains from a global point of view.  Germany, Central Europe, Scandinavia and Benelux typically draw 50% or more of their GDP from exporting, and export production also accounts for more than 15% of EU GHG emissions[3].

Europe needs to establishing a level playing field for low carbon technologies at global level.

Despite the scale and complexity of the task, carbon-neutral industry is feasible and offers a major competitiveness opportunity. If done right, and by 2030, the industrial pillar of the Green Deal can build back better the industrial foundation of Europe.



[3] The EU Green Deal and Its Industrial and Political Significance, ECIPE

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