Dear President Lagarde, Dear Dr. Birol,
Your Excellencies, Ministers, Ladies and Gentlemen,
I am glad we gathered here today to discuss one of the biggest challenges of our times: how to change the way we fuel our economies - and how to do so in an “orderly” fashion.
We have come a long way since the world's leaders made a collective commitment, here in Paris … to accelerate the decarbonisation of our economies to limit global warming.
Since then, a lot has been done. But what has been achieved so far is not enough. And it is not… orderly.
For too long, we lived under the illusion that fossil fuels were a cheap and reliable source of energy. Only when Putin’s armies invaded Ukraine, we realised that they are neither cheap, nor reliable.
We should have known better, and we should have moved faster.
It’s not just about Russia.
Until we complete the energy transition, Europe will remain hostage to the whims of foreign powers, which control the supply of fossil fuels.
Each time they decide to cut output, prices across the economy increase. The result? President Lagarde, here, and her colleagues at the ECB must deal with a severe inflation problem.
European companies find themselves at a disadvantage vis-à-vis global competitors, and our households suffer from skyrocketing costs.
The transition to clean energies is not only a moral imperative to protect the life of future generations on our planet, it also has become a necessity in safeguarding the competitiveness of our industry and Europe's economic prosperity … not tomorrow, but today.
But let’s be fair – Europe is doing a lot already.
The European Union devotes vast public resources to the energy transition.
The EIB stands behind the effort. Last year, we signed more than €17 billion in new financing for clean energy projects inside the EU. That’s more than ever before.
IEA data shows that clean energy investment in Europe is rising and that the increase is accelerating.
But, as I said, dear friends, doing a lot doesn’t mean doing enough.
First of all, because public coffers are simply not deep enough to bankroll the huge investment needed. We need to mobilise the private sector.
And private investors, ladies and gentlemen, value certainty, clarity and efficiency.
By certainty, I mean that we cannot leave any doubts about our commitment. Talk of watering down, pausing, or even reversing the green transition only creates confusion and hampers investment.
By clarity, I mean that our rules must be uniform and facilitate investment. Too many essential projects for the transition are today stuck in bureaucracy. Our regulatory framework is often too complex. We simply have no time for this!
This brings me to efficiency. Our banking union is still incomplete and our capital markets union a work in progress, as president Lagarde just said. This means that clean tech innovators in Europe find it difficult to raise capital to scale up their business.
That’s why the EIB Group launched earlier this year the European Tech Champions Initiative, a fund of funds that will provide much-needed late stage growth capital to European innovators. So far, five EU countries have joined the fund, I really encourage others to follow suit.
Some of you may ask why I mentioned high-tech start-ups in the context of the energy transition. Because, dear friends, many of the essential technologies needed for an orderly energy transition are not there yet, or if they are, they are still too expensive.
You see, for some areas, like electricity production, clean solutions are already cheaper and faster to deploy than fossil fuels. But for others, like aviation or heavy industry, we still need clean alternatives which are economical. That’s why innovation is key.
That was the reason the EIB launched dedicated package of support to REPowerEU. We are committing an additional €45 billion euros over the next five years, on top of our regular lending, to support clean energy investment and Europe’s green industry.
At a time of high interest rates, our financing will offer essential funding. But as I said before, this is not just a question of money: a share of these additional funds is earmarked for risky, highly innovative investments. We seek to de-risk these investments and crowd in private capital. That’s what we had done 20 years ago, with offshore wind farms, when the sector was still at its infancy. And we are doing it again now.
Crucially, we are not just financing renewables, energy storage, grids or energy efficiency. We are also expanding our scope to finance the deployment of state-of-the-art manufacturing capacity in strategic net zero technologies. Moreover, the additional funds will be used to support investment in Critical Raw Materials.
There are two reasons for doing that:
The first reason is, unfortunately, because we risk entering a global subsidies race in clean technologies. This is counter-productive and may stifle investment.
Mitigating climate change is a global good. Europe, the US, China and everyone else should be working together. The fact that we don’t always do is a tragedy.
In this situation, EIB financing is meant to offer targeted support to European industries, to help them compete on a global stage. But make no mistake, we are not writing blank cheques. We want to finance bankable and state-of-the-art projects, which will produce the essential goods and materials that not just Europe – but the entire world – need for the transition.
The second reason behind our initiative is that support for green manufacturing is creating jobs.
And the energy transition will not be orderly unless we create new jobs, here in Europe. If our people feel that they are being left behind, that the transition creates new dependencies, they will push back. Social cohesion will be threatened, and the transition will fail.
An orderly transition can only be a just transition. The EIB is deploying the full range of its resources to support investment that will lead us there.
I look forward to your discussions.