Furthermore, in July 2021, the European Commission presented a comprehensive package to deliver the European Green Deal, which proposes to revise existing instruments as well as propose new ones in order to set the EU on a path to reach its climate targets by 2030. This package constitutes one of the most comprehensive set of proposals on climate and energy the Commission has ever presented. Among others, it will contribute to the development of the clean energy system in the next decade by spurring innovation, investment, and creating new market demand in the EU, while ensuring a socially-just transition, cementing EU global leadership in the fight against the climate crisis.

Technological advancement in the clean energy system is of critical importance to achieve the EU’s climate and energy objective by 2050, as highlighted in the “Impact Assessment of the Climate Target Plan 2030”. The International Energy Agency (IEA) projects that, while most of the reductions in CO2 emissions through 2030 will come from technologies already on the market today, almost half of the reductions needed by 2050 will come from technologies that are currently at demonstration or prototype phase . This second annual competitiveness report tracks the current and projected state of play of different clean energy technologies and provides insight on how the clean energy system contributes to making the EU climate neutral by 2050, while respecting the European Green Deal’s green oath to “do no harm”. Looking at the different facets of competitiveness, this report identifies strengths, challenges and points of attention for the EU clean energy system. In particular, it shows that trends in both gross value added and employment in clean energy – barring disparities within the sector – are surpassing those of the overall EU economy, while public investment in clean energy R&I continues to see a rebound trend over the last five years, though not yet reaching the level of 2010. The European innovation ecosystem is in a leading position when it comes to high value patenting as well as in the support of early-stage climate tech start-ups. However, we are far behind other geographical regions when it comes to scaling up. From a technological perspective, the EU retains a strong position in the wind industry, however may be at crossroads in multiple other industries including solar PV, renewable hydrogen, heat pumps or renewable fuels.

The assessment of the competitiveness of the EU clean energy system is done, in this report, in accordance with Article 35.1(m) of the Regulation on the Governance of the Energy Union and Climate Action, as part of the State of the Energy Union report. As competitiveness is a complex and multifaceted concept which cannot be defined by a single indicator, this report proposes a set of widely accepted indicators capturing the entire energy system (generation, transmission and consumption) and analysed at three levels (technology, value chain, and global market). The underpinning data for each indicator are contained in the accompanying Staff Working Document.