Heat pumps in Poland, clean energy in Spain and batteries in France

(Cipher) - To adapt a popular Mark Twain quote: The reports of Europe’s industrial death are greatly exaggerated.

In fact, clean industries are booming across the Continent, and now we need to seize on them to achieve a cleantech trifecta: compete on a global scale against China and the United States, ensure energy security and retain affordability for our citizens and companies.

These factors are closely intertwined:

• As long as the European Union depends on expensive fossil fuel imports to run its energy systems, companies’ production costs will be higher than in other regions, and households will struggle to foot their energy bills.
• As long as austerity measures are the norm, neither industry nor citizens will get the support they need to move to net-zero technologies.
• And as long as the EU won’t ramp up investments and cleantech manufacturing, the U.S. and China will largely divide up the growing global markets among themselves.

The solution to all three problems is designing a holistic European Industrial Strategy to strengthen industrial competitiveness and prosperity. The growing political support for such a plan across the political spectrum confirms its necessity. Companies ask for industrial policies and investments, while trade unions argue against austerity and for investing in local industrial jobs.

Hence EU Commission President Ursula von der Leyen plans to introduce a “Clean Industrial Deal” in late February, and the plan will be a key political priority for the next five years.

Investing in Europe, rather than in imports, should be a no-regret strategy. Early successes in reindustrialization already exist across the Continent, including the just coal phase-out in Spain, heat pump production in Poland, Northern Czechia and Slovakia and battery manufacturing in France.

In Spain, phasing out coal is being transformed into a new industrial vision. Regions that relied on coal mining, such as Asturias in the country’s north, are seeing green energy and cleantech industries, including solar panel manufacturing and wind farms, bring fresh investment and job opportunities, reshaping the local economy. Currently, more than 1,500 former coal miners in Asturias are employed in renewable energy sectors.

Moreover, Spain’s government, through its Just Transition Plan, part of a program where the EU provides funding for regions to transition to cleaner industries, allocated over €800 million for regional development in coal mining areas like Asturias. Since 2020, this investment has created 4,000 jobs in the clean energy and cleantech sectors across the region.

Meanwhile, in the area spanning Poland, Northern Czechia (the Czech Republic) and Slovakia, the booming heat-pump production industry is creating a dynamic cleantech hub. This area, once focused on coal and energy-intensive industries such as steel or cement production, is now a key player in Europe’s transition to clean energy, with heat-pump production contributing to both local job creation and broader European energy security goals.

Heat-pump production in Poland has grown by over 120% since 2021, creating more than 10,000 new jobs. In coal-dependent regions like Silesia, over 20 cleantech projects have been launched since 2020, driving the shift toward renewable energy and aiming for 40% clean energy production by 2030.

Similarly, in northern France, a battery manufacturing hub is reindustrializing regions that faced substantial structural changes after the departure of heavy manufacturing industries. These new factories are attracting massive investments and generating jobs in a region facing significant structural change, showing how cleantech can spearhead a region’s economic revival.

As of 2023, over 10,000 jobs have been created, and projections suggest that up to 20,000 direct jobs will be supported by 2030, thanks to investments in the region. These investments are part of France’s larger strategy to become a European leader in battery manufacturing.

Our study shows that a European Industrial Strategy can accelerate the transition to climate neutrality and bring socio-economic benefits. Investing €668 billion by 2040 into Europe’s cleantech manufacturing sector would save over €850 billion on gas, oil and coal imports by 2040, making energy more affordable and creating around two million additional jobs.

Now, cynics will say the European Commission has published numerous industrial policy plans that never resulted in any policies with teeth. True, but in the past, the imperative to act jointly seemed less urgent to national governments. Taking care of the respective national industries seemed sufficient. Now the stakes are higher.

Never before have we seen such aggressive Chinese policies and subsidies on cleantech. Never has manufacturing zero-carbon technologies been perceived to be so critical to fostering countries’ security and economic stability. If, on top of that, trade unions and large European companies ask for more policies and support to strengthen the “business case” for the energy transition, it should be difficult for policymakers to disagree.

(Reporting by Linda Kalcher)