The outlook for cleantech


inflationThere were many unexpected circumstances to overcome in 2022 - the war in Ukraine, an energy crisis that is actually a dependency crisis, and unprecedented inflation. Around the globe, people are looking for ways to combat inflation while still dealing with a current or impending recession. The question is whether Biden's Inflation Reduction Act represents an opportunity or a threat for European, and consequently Flemish cleantech. Will US cleantech solutions gain a foothold in Europe at the expense of European solutions?

Economic recession influences the importance of cleantech

The European Climate Law is committed to the EU's climate target of reducing EU emissions by at least 55% by 2030. Both the US and Europe are accelerating the pace of cleantech policy-making, through the 2022 US Inflation Reduction Act (IRA) for example. Whether the IRA will have a positive or negative impact on the EU will depend on the measures Europe takes.  In the third quarter of 2022, the greatest share of European investment went to energy innovation, which reflects the strong demand for energy crisis solutions. The European Commission is investing €3 billion in innovative cleantech projects to implement REPowerEU and accelerate Europe's independence from Russian fossil fuels. Energy supply is the top priority.

In February 2023, the European Commission presented a Green Deal Industrial Plan to strengthen the competitiveness of Europe's net zero industry and accelerate the transition to climate neutrality. The plan builds upon earlier initiatives and relies on unified EU market strengths to complement ongoing efforts within the European Green Deal and REPowerEU. It is based on four pillars: a predictable and simplified regulatory environment, faster access to sufficient funding, an upgrade of skills and open trade for resilient supply chains.

The US and Europe are investing in their respective local sourcing strategies

Since the energy crisis across Europe, the US and China, the EU has focused on becoming more independent from third parties, primarily Russia. As a result, Europe and the US are strengthening their local sourcing strategies to reduce their dependence on other countries. In light of this desire for less dependence, including on energy solutions and also the fact that China and Russia have been developing closer economic ties, we must highlight the situation in China too.

China is carving out its own path

China aims to achieve net-zero emissions by 2060. According to experts, this is feasible since the country can easily apply technologies such as solar and wind energy, ultra-high-voltage transmissions, interconnection of national grids, green hydrogen and slow-charging electric vehicles. Over the last eight years, China has tripled its investment in cleantech. By comparison, the US has only doubled their investment, while there has been a general decline in Europe. In addition, electrification and clean energy are likely to impact China's demand for metals such as aluminium, copper, lithium and nickel. This demand relies heavily on the accelerated development of technologies such as renewable energy sources (the production of photovoltaic panels and wind turbines), electricity grid infrastructure, the charging infrastructure, electric vehicles and battery production. China is already the global leader in processing and refining lithium and will likely encourage the growing production of lithium batteries. Moreover, China has set itself the goal of producing more than half of the hydrogen they require from renewable energy sources, getting one million hydrogen vehicles on the road and building more than a thousand hydrogen refuelling stations, all by 2030. China has also invested heavily in the innovation of plant proteins, with a plant-based meat substitutes market worth 9.7 billion US dollars. For precision agriculture and related technologies too, China is committed to developments in unmanned aerial vehicles, sensors, satellite data, automation, robotics and AI technologies. For example, China has already been using drones to monitor pollution and agriculture for the last five years.