Daily Briefing

Editor’s note: ‘Finance as usual’ is not an option

Wind turbine production and installation
The European Commission estimates that €92bn of investment will be needed by 2030 to scale the manufacture of six key energy transition technologies including wind power (Photo: Fabrice Coffrini/AFP via Getty Images)

The latest edition of our Sustainable Views newsletter

Dear reader,

The EU will face a €50bn cleantech investment gap by 2030, according to a briefing published today by Cleantech for Europe. Cleantech venture capital investments plateaued at €11bn in Europe in 2023 for the third year in a row, it adds, with investments in the sector “still largely dominated by the US, with the Asia-Pacific region steadily gaining ground”.

The European Commission estimates €92bn of public and private investment will be needed by 2030 to scale the manufacture of six key energy transition technologies — namely solar, wind, batteries, heat pumps, electrolysers, and carbon capture and storage. The €50bn or so investment gap could “easily grow to hundreds of billions of euros”, warns Cleantech for Europe, if other technologies, including green steel and cement, long-duration energy storage and green chemistry, are added to the list of those industries needing support. 

To fill this hole, Cleantech for Europe says the EU should focus on the “deal” bit of its Green Deal in the form of a “public sector-enabled, private sector-led green reindustrialisation” that includes an ambitious cleantech investment plan. For the organisation, such a plan should focus on mobilising capital from institutional investors, deploying public guarantees to de-risk cleantech investments, and earmarking carbon pricing revenues to cleantech manufacturing.

A proper reindustrialisation strategy should also help ensure, as per the discussion in yesterday’s newsletter, a “just transition” by creating jobs and new opportunities. 

The London School of Economics has today launched its Just Transition Finance Lab led by the Grantham Research Institute’s Nick Robins. Its vision is “the transformation of the global financial system to achieve progress on climate and wider environmental goals through a people-centred approach”. It wants to show “how the just transition can be both possible and investable”, and warns “incremental changes to ‘finance as usual’ practices” are insufficient.

How to respond to China’s financing of the energy transition is a constant topic of conversation and a source of deep concern in the EU — think the European Commission’s decision last year to open an anti-subsidy investigation into China’s electric vehicle market. But it is not just in terms of cleantech funding and the construction of renewable technologies that China is charging ahead. 

James examines how the country is overhauling its voluntary carbon market to meet international standards. Research from the London Stock Exchange Group suggests China’s new VCM can “to some extent revitalise the global voluntary carbon market”, given its size and the extent of Beijing’s climate goals, which include achieving peak emissions by 2030 and net zero by 2060.

Finally today, we look at yet more research underlining why all this investment and change is so urgently needed. This time it is academics from Brazil, Europe and the US warning that without drastic cuts in emissions and deforestation, the Amazon rainforest will approach a “tipping point” that could ultimately lead to its ecological collapse.

Until tomorrow,

Philippa

Philippa Nuttall is the deputy editor of Sustainable Views  

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