Europe’s two major challenges, energy independence and climate change, are closely intertwined. But they share one solution – a swift transition to a greener, more sustainable economy.
The spike in energy prices caused by the Ukraine war put enormous pressure on EU firms, increasing their costs and hurting their competitiveness internationally. While energy prices have since come down, the crisis brought into focus Europe’s dependence on fossil fuels.
Firms, however, are also dealing with a more profound crisis: climate change. The severe weather caused by climate change threatens individual businesses, particularly those that are unprepared for the consequences of higher temperatures and extreme weather events. In Europe alone, extreme weather caused over €145 billion in economic losses from 2012 to 2022, according to the Intergovernmental Panel on Climate Change. Meanwhile, businesses are struggling to adapt to the decarbonisation of the European economy demanded by Europe’s ambitious goal of cutting net emissions 55% by 2030, compared to 1990 levels.
The economic shift required by the green transition will present enormous opportunities for some firms, but it also threatens others that are ill-equipped for the transition or for climate change more generally.