Dear Emmanuel Faber,
dear Sabine Mauderer,
dear Ulrike Malmendier,
dear Andreas Scholz,
Ladies and gentlemen,
Global warming is not a future threat. It has become a reality.
2023 will be the hottest year ever measured, and we are on track for an increase in global temperature over 2 degrees of warming – well over our capability to adapt.
I do not take these results as an excuse for despair, and neither do we at the European Investment Bank. On the contrary, we see them as motivation to become even more active in building the global low-carbon economy of the future.
Let’s be clear:
The decarbonization of our economies is not only a moral imperative to protect the life of future generations on our planet; it has become a necessity in safeguarding the competitiveness of our industry and Europe`s economic prosperity, and security, not tomorrow, but today.
Professor Malmendier and her colleagues from the German Council of Economic Experts have just released their Annual Report with, let’s be frank, some shocking results. German output is still just below the level it was when the pandemic started almost four years ago and is expected to shrink in 2023!
This shouldn’t be surprising to us, given that we are heavily depending on others for our energy supply, and have witnessed under-investment compared to many of our global competitors for many years.
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? We must deal with a severe inflation problem; European companies find themselves at a disadvantage vis-à-vis global competitors; and our households suffer from sky-rocketing costs.
But let’s be fair – Europe is doing a lot already. The European Union devotes vast public resources to the energy transition, to make our economies carbon-free and, at the same time, less dependent on foreign powers.
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 are today stuck in bureaucracy. Our regulatory framework is often too complex. We simply have no time for this!
This includes the EU-Taxonomy. We must ensure that it becomes practicable for market actors. The taxonomy is a hugely important concept which we support - but we need to strike a balance - and markets, clients need to be able to apply it.
When EU Commissioner Mairead McGuiness recently announced that it is now her top priority to make the EU-taxonomy easier to apply for investors, I couldn`t agree more and she has the full support of the EU Bank!
This brings me to efficiency.
A well-functioning internal market is Europe`s biggest asset, and key to our competitiveness, but also to driving forward the transition of our economy.
But instead of working on its completion, Member States undermine it through comprehensive subsidy programmes. Since the temporary state aid rules have been put into place to cope with the fallout from Russia's war in Ukraine, the two biggest member states account for 4/5th of all approved state aid programmes.
We also still lack a banking union and capital markets union that deserve their names. These are much needed so that cleantech innovators in Europe find it easier to raise capital to scale up their business.
That’s why the EIB Group launched this year the European Tech Champions Initiative, a fund-of-funds that will provide much needed late-stage growth capital to European innovators.
Some of you may ask why I mentioned high tech start-ups in the context of the energy transition. Because, ladies and gentlemen, 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.
We have supported innovative investments for years. We have financed innovative projects, such as floating offshore windfarms in Portugal, battery gigafactories and quantum computing in Sweden, the large hadron collider in Switzerland, nanosatellites in Bulgaria, COVID-19 vaccine research in Germany.
Allow me to mention one last point, before I will close.
Europe is too much focussed on itself and too little on the rest of the world.
When the European Coal and Steel Community was founded, in 1952, Europe still generated 37% of the world's output and accounted for 13% of the world's population. Today, Europe's share of the global economy is at 15% and only just under 7% of the world's population living in Europe. And still, most of our political discussions centre around ourselves, and there is too little consideration for Europe`s role in the World.
We have been speaking of partnerships at eye-level with the Global South for years – but have done very little to build them.
We now woke up to massive dependencies – not only in energy (Russia), but also when it comes to microchips and semiconductors (Taiwan) or critical raw materials (BRICS) – and need partners to diversify our global supply chains.
That’s a painful realisation and one that we will only ever achieve if we complement a true European foreign policy with a proactive investment strategy beyond our borders.
Ladies and gentlemen,
Let me close here … I very much hope that I could convince you that:
innovation is key for a competitive and prosperous Europe,
we need more and not less Europe,
our single market is our biggest asset,
we need to stop the navel-gazing, and
have to start thinking about our role in the world.
I wish you a wonderful conference with productive discussions!
After meeting with EU finance ministers on Friday at an informal gathering of the Economic and Financial Affairs Council in Ghent, Belgium, EIB President Nadia Calviño held a press conference to discuss the EIB Group's ambitious plans with a focus on eight core priorities.