This is an extract from a recent keynote speech by European Commissioner for Climate, Net Zero and Clean Growth Wopke Hoekstra at the European Sustainable Energy Week: ‘Powering a fair and competitive green transition’

The reality is – as we reflect on where we stand with climate action and the clean transition, it might seem as though it’s less at the top of people’s mind as it used to be. The mood has shifted. The conversation has shifted. And frankly speaking, if you think about security and defence, I’m very much in favour of having it very high on the agenda given all the geopolitics Europe and the world are facing.

And yet, there are also those out there who argue that prioritising economic competitiveness would mean lower climate ambitions. Slower on the clean transition. And that is where I truly have a different view. As comfortable as it is, it’s not enough to be here in this bubble and talk to the folks to the left or the right. It’s not enough to convince ourselves. What we need to do is go out there and articulate why this is so important.

And it starts in my view with the common misconception that’s often part of these debates. That climate action and the clean transition is about the bees and the trees. About altruism and saving the planet. That it’s a cost and a luxury we can’t afford today.

That’s not the case. If anything, this is about something much closer to home.

Climate change is a harsh pressing reality for our ecosystem. It’s also an economic reality and unfortunately it will only become more so in the years to come.

It’s exactly with this nexus in mind – climate, competitiveness and independence – that we launched a Clean Industrial Deal in February of this year. This is, if we do it well, a business plan to re-industrialise, decarbonise, and make Europe more competitive.

When you look at the data, Europe easily shoulders in the range EUR 50-100 billion a year in terms of economic damage. And the bad news is that number will only go up in the years going forward. Because the world and the planet is heating up. And Europe is heating up twice as quickly as the rest of the planet. So we will see more devastation, flooding, extreme weather events that will come at a much higher cost.

Climate change is also more and more about economic security, about energy freedom, about never again being taken hostage by rogue states like Russia. It’s about strengthening our supply chains. Whether that’s on defence, tech or critical raw materials. And it could be about creating high-quality jobs in a competitive, circular economy moving into clean tech.

And so I will continue to articulate, that decarbonisation is about climate, competitiveness and independence.

It’s exactly with this nexus in mind – climate, competitiveness and independence – that we launched a Clean Industrial Deal in February of this year. This is, if we do it well, a business plan to re-industrialise, decarbonise, and make Europe more competitive. If we manage to pull it off, it will provide investment certainty – exactly what our businesses are looking for. It’s a strong signal that we’re fully committed to the clean transition. That we’ll continue pushing forward at full speed. From my conversations with businesses across Europe, this is exactly what they’re looking for.

We want to support our businesses in succeeding in this huge transition.

We are tackling the challenges of high energy bills, unfair competition and red tape faced by energy intensive industries. We’re also supporting innovative companies developing cutting-edge clean technologies. And making sure they are much better equipped than they are today to scale up here in Europe.

Just to give you the facts: If you look at the number of start-ups we have in Europe, it’s quite a decent number. Maybe even more than comparable with our friends in the US. But if you then look at scale-ups – companies that are able to grow – you will see a huge difference with the Americans. It’s simply too difficult here in Europe. That’s also the reason why over the course of the next few years, we’ll be pumping an additional EUR 100 billion of funding into EU-made clean manufacturing.

The EU is pulling out all the stops to re-industrialise our economy. We’ll continue to invest in the technologies that will power a cleaner, more competitive and self-sufficient future. But let me be blunt. To be truly successful, we need something that’s at the heart of your work – what I would call a Marshall Plan for Energy.

Let me describe what I mean by that. In my view, there are five key elements we need to double down on.

First, we need to double down on renewables, and the numbers show why. Between 2010 and 2020, the cost of solar plummeted by 82%. It will get cheaper and cheaper – and it will make us every more competitive. Doubling down on renewables in general, and solar in particular, is probably a very smart business decision.

Second, let’s assume we have that renewables capacity, you need to fuel that somewhere, transform it into grid capacity. Doubling down and making huge investments over the next decade in grid capacity is critical. It’s estimated that every euro invested in the electricity grid can save over EUR 2 in system costs.

And interestingly enough, there is huge appetite from large investors like pension funds, who are asking one thing – could we join the party? Could we be part of that huge investment? They see the opportunity. They see the ‘why’ behind this transition – the logic of climate, competitiveness and independence – and they’re looking for long-term relatively safe type of investments as part of their portfolio. So there is public money going in there. But there is also private money on the table here.

Third, we need to invest in cross-border electricity inter-connectors between all 27 Member States. Treating Europe as one and building one market will save us billions in annual losses from inefficiencies and grid congestion. It’s much cheaper and it will get us percentages of additional capacity.

That brings me to a fourth area where innovation is to be had – that’s energy storage capacity. The jury is still out on who will win the race for dominating storage capacity. And in my view it’s critical that we double down on our investments here. That we go all out in storage capacity.

Because what will the reality be? We will be able to make use of that abundance of solar and wind. And we will be able to put it into our grid. As we all know, consumption is not equal in a 24-hour cycle and in some places, you would be even disconnected from the grid and still want to make use of energy capacity. That’s where storage comes in – at a completely different level than we have here today.

We need to invest in cross-border electricity inter-connectors between all 27 Member States. Treating Europe as one and building one market will save us billions in annual losses from inefficiencies and grid congestion.

That is precisely why we’re doubling down with the Innovation Fund in this realm. To give you the numbers, the EU’s Innovation Fund has already financed over 15 projects, developing, scaling up, making best use of innovators, experts who are seeking to dominate the area of storage capacity. They have been adding a huge amount of MWh to the capacity there. But again we’re only in our infancy. There is a whole world to be conquered in the area of storage.

That brings me to my fifth and last item. A couple of weeks ago, I was in the Member State that I know best visiting a paper mill. You assume that these guys are producing paper. And indeed, they’re an energy-intensive business, but don’t need to run at full capacity all the time. They can choose over a 24-hour cycle when to produce more energy, when to do less and how to use their energy. At the site, I met with the CEO. I also met the head of the regional electricity network. We were trying to do the numbers. This paper mill was filtering back to the network part of this capacity. On good days, the paper mill was making more money selling capacity to the grid than producing paper. The CEO of the electricity company explained that if you take 50-100 companies and take the next 2-3 years to do something similar to here, we would easily free up 6, 7, 8, 9% of capacity to the network. That’s quite interesting.

The Netherlands has made significant jumps forward on renewables but is more and more constrained in terms of the network. Then let’s assume you do the math for Europe as a whole, you would assume that these numbers are roughly the same. Maybe slightly less industry. Maybe it takes, in some cases, fewer years, or the same number of years. You could get 5, 6, 7 % of additional capacity. It sounds small but it’s massive. And it’s much cheaper than my second point on grid capacity because putting copper in the ground is still relatively expensive.

These are five items I would love for us to embark on. Yes we’re facing a difficult terrain. Yes there are competing concerns. But this problem – climate, independence, competitiveness – will not go away. It’s better addressed head on. Let’s continue with decarbonisation, move into this Marshall Plan and tackle each of these five dimensions.

The complete speech can be accessed here