EIB Investment Report 2020/2021: European Union is leading the way in green technology investment

The outbreak of COVID-19 in Europe had immediate and wide-ranging consequences for investment: according to the new edition of the EIB Investment Report 2020/2021 “Building a smart and green Europe in the COVID-19 era”, EU firms are likely to reduce investment by at least 25% in the year following the crisis. The report also shows that in a post-pandemic “new normal”, investment in digitalisation, innovation and climate will be more important than ever before. Without such investment, large sections of Europe’s economy risk falling behind. However, the European Union now has the opportunity to build on its leadership in green and digital technologies to recover from the pandemic, manage the climate transition and maintain its ability to compete in the global technology race.

“We have witnessed a massive economic shock and an impressive policy response. Investment was hit hard. Now it is crucial to adapt to the new normal and deal with pre-existing gaps, both in the public and in the private sector”, said Debora Revoltella, EIB Chief Economist. “In the public sector, investment plans for 2021 show a positive dynamic. The challenge lies mostly in maximising impact and the capacity to absorb planned investment. The recovery of corporate investment will depend, in part, upon a concerted policy response that instils confidence in European businesses about the trajectory of the recovery. Equity financing and risk-sharing initiatives between the public and private sectors will be key to unlocking the private investment needed to keep the European Union competitive and drive its green and digital transformation.”

“Our annual Investment Report is the most comprehensive overview of investment dynamics in Europe. This year’s edition recognises the strong policy response to the crisis and points to the green and digital transition as an opportunity to gain competitiveness, recover from the pandemic, fight the climate emergency and create the jobs of the future”, said EIB Vice-President Ricardo Mourinho Félix.  “However, the uncertainties and financial strains created by the pandemic risk are preventing Europe’s economy from embarking on the necessary transformation. Patient investors such as the EIB can help the European Union reignite investment and enact a long-term vision on the green and digital transformation.”

Read the key findings: EIB Investment Report 2020/2021 – key findings or Download the full report

The European Union is a global leader in green innovation, and even more so in innovation that is both green and digital – despite the United States’ leadership in most digital domains.

EU firms lead the United States in terms of green investment and digital adoption by green firms. Compared to the United States, European firms are less likely to have adopted digital technologies, but they are more likely to invest in measures for mitigating or adapting to climate change. The share of firms that make green investments and are digital adopters is also marginally higher in Europe (32% vs. 28% for the United States).

According to the most recent data, the European Union registered 50% more patents in green technologies than the United States, with Japan and China further behind. Moreover, the European Union registered 76% more patents that combined both green and digital technologies than the United States, and four times more than China.