En 2007, the gross domestic products (GDP) of the United States and the European Union (EU) were almost similar; in 2024, US GDP will be almost 80% higher than that of the EU. After a decade of counterproductive austerity, Europe has missed the shift to new technologies. China has established itself in the fields of batteries, wind power, solar power and electric land transport, and here we are once again put against the wall by the gigantic recovery plans of our partners and competitors.
While Europe is talking about slowing down its climate action, the Biden administration launched the Inflation Reduction Act in 2022, which is expected to mobilize more than $500 billion in support for low-carbon industries. India launched the Production Linked Incentive and China provides its industries with subsidies distributed by different levels of government, acting on both budgetary and monetary leverage.
Meanwhile, the proposed reform of fiscal rules currently under negotiation between the European Parliament and the Member States promises to re-establish budgetary constraints in total opposition to one of the key objectives of the current Commission, namely the realization of the Green Deal, itself made up of a pile of uncertain financing, a substantial part of which already exists. This is why the debate on financing Europe’s carbon neutrality objective, without even talking about the preservation of biodiversity, is essential.
Modernize two sectors: agriculture and industry
To recover, Europe must rely on what it knows how to do and which will benefit its populations and the rest of the world: the decarbonization of its economy. It must also ensure its energy independence, thus reducing the imported inflation which causes a dangerous and unnecessary increase in interest rates from the European Central Bank (ECB) at the expense of the investments necessary for ecological reconstruction.
To avoid this planned downgrading, Europe must invest massively in its future. Just published, the study “Road to Net Zero” of the Rousseau Institute estimates the investments needed by 2050 at 40,000 billion euros, or 1,520 billion euros per year. Three quarters of these amounts are already available and must be disinvested from harmful activities to be redirected towards the transition, for example from combustion engine vehicles to public transport and electric vehicles.
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