Good morning, Mr President Pierre Gattaz,
Ladies and Gentlemen,
Thank you very much for this opportunity to share my thoughts today with you and to listen to your views.
It is just a few weeks ago, six weeks ago, that I have been at the World Economic Forum in Davos and I had a meeting with the International Business Council. And someone asked me the very right question. He said: ‘Do we want Europe to be a global player or a playground for others?' And this is the big question indeed. It is as simple as that. And I have no doubt about the answer. I am absolutely confident that Europe will continue to be a global player in the world of tomorrow. And I am confident, because I know what European businesses are capable of. We are the continent of innovators, we are the continent of pioneers, of entrepreneurs. We are a continent of family companies that have resisted all crises and that have reinvented century-old productions. We are leaders in a huge number of sectors - from the automotive to clean energy, from chemicals to satellites.
But we also know that industry is changing faster than ever before. And we have to define a new industrial way for Europe in this rapidly changing world. I see basically three main drivers of this change. The first one is, of course you know it all, technology: It is about big data, it is about Artificial Intelligence. They are completely reshaping the way we do things. And this is not just about self-driving cars. It is way more, it is a revolution that is touching all sectors of our economy - from pharma to fashion, from big factories to every small family enterprise.
It is indeed all about data. Data is the fuel of our economy. Artificial Intelligence will soon help companies, for example, to reduce their energy bills by smartly allocating the energy over day and night. In the companies, it will provide a better consumer and customer service, it will transform our design and production processes. All this, you know it better than me, is already happening, and many of you see this in your daily business and your daily work. The challenge for Europe is not just to adapt to these changes. The challenge is that we want to shape our own digital future. And I am confident that we are able to do that.
The second main driver is the sorry state of our environment. 2050: That is the year Europe aims to become carbon-neutral, climate-neutral. And it is no longer impossibly distant. If I think of my children, they will be a little bit younger than I am now in 2050. And I have - and you all have - a glimpse of the possible environment they will likely experience, and it is a sobering glimpse, if we do not change dramatically. And honestly, I feel a profound sadness that they might be dealing with severe problems of our making. And you know these problems. Just to name a few: It is the reduced biodiversity - we are losing 1 million of species -, it is the rising sea levels - we know today already what islands will disappear, and what cities, it is already a fact. It is the increasing desertification, which causes a huge amount of security problems and conflict potential. Science is clear: Human-caused climate disruption is one of the best-studied phenomena in this world.
And the majority has understood this. But some are still deploying the notion that you can downplay climate change and want to continue with business as usual. I think this is not only unacceptable with regard to our children and their right to live in harmony with nature as we have it, but it would also be a huge missed economic opportunity.
Businesses all across Europe demonstrate that a different growth model is possible - a growth model that creates jobs and economic value while respecting our environment. And be it the small enterprises that are renouncing single use plastics or the big steel industries that have launched a transition towards fossil-free steel. Some of you have started to develop their own ‘sectoral green deal'. The steel sector is already doing that. Others, like the chemical sector, are on the point of joining. All this is great news, it is necessary great news for the environment, but also for Europe's competitiveness.
At the end of last year, 44 of Europe's largest investors, representing EUR 6 trillion of assets, asked us - the European Union, the European Commission - to urgently pass a climate law. Why that? They want reliability! They want clarity! They want us to be dedicated to go towards that goal. And rightly so! And indeed, as you have said, President Gattaz, yesterday, we have made our proposal for the first ever European Climate Law. It will help you plan your long-term investment, it will provide a clear sense of direction all across our Union. I see the climate transition as a huge opportunity for the European economy and for the European business.
We can develop and deploy clean technologies that the whole world will want to adopt - to cut pollution and to enhance productivity. We can set new standards and we can become the exporters of knowledge-driven clean technologies. We can be a world leader also taking the most ethical choices. We have the first advantage of the first-movers. So we are ahead of other continents, of other sectors, which is not in every case the reality of the European business. And this is why I think of the European Green Deal as our new growth strategy. A strategy for growth that is not constrained by fossil fuels and that is not constrained by the constant need for more resources. But rather a strategy for growth that offers maximum added value with renewable resources while gaining the trust of our society. Because people have a gut feeling on what is going on. And they want a different approach to growth.
The third driver of change for our industry is geopolitics, and the growing pressures from international competitors: You know it all, it is trade disputes, it is the return of protectionism. And yes, the global competition is fierce. But European businesses - be they large or be they small - have the quality and the capacity for innovation and to thrive in this difficult environment. Through the years, many of you have become stronger thanks to the Single Market. And you have made the jump to the global markets, to become world leaders in your sectors. European companies have prospered thanks to our unique set of free trade agreements and thanks to a global trade system that is based on rules. We have many, many success stories to be proud of - from telecom to railways, from aircraft to agriculture.
But indeed, we also have to ensure that our industries and their workers are competing in a fair environment, not only at home, but also abroad. In these years, we have witnessed unilateral and arbitrary action against our industries. And there is hostility against the WTO, and against the idea of a level playing field for companies all over the world. So the challenge we face is to safeguard this level playing field for European industries - internally and externally. You must be able to innovate and compete in fairness, because this determines European prosperity now and in the future.
And in this context, allow me indeed to make a few remarks about our relationship with the United States, because you mentioned it, President Gattaz. I just want to emphasise, first of all, with all the disputes we do have and all the issues we do have with the United States and the White House at the moment being, I am a strong believer in the transatlantic friendship and the solid foundation we have for this transatlantic friendship. There are zillions of contacts with our American friends: business contacts, personal friendships, our researchers, scientists, culturally. So we should always keep that in mind when tackling the obvious problems that are out there, without any question.
I had a good meeting with President Trump in Davos. And I believe that there might be a momentum towards improving our relations on a positive footing. Of course, and this for you to know, I am absolutely aware that any deal that might be worked out needs to be balanced and compliant with WTO rules and it has to be compliant with the existing European Union mandate as you mentioned it, President Gattaz. So back to the initial question: Will Europe be a global player or will it be a playground for others?
After the first 100 days in office, let me tell you that I have seen a resolute Europe. I have seen a Europe from the business sector, and from youth movements and from the civil societies - that is clearly demanding for ambitious goals, for ambitious policies. And we have set out goals in our clearest possible way: We want climate neutrality. We want digital leadership. We will not just adapt to the change, we will shape it, with our own capacity for innovation. And by doing so, make Europe more competitive in the world. A continent that has a vision, a continent that has foresight, a continent that has resolution, a continent that takes control of its own future and a continent that masters its own destiny. And it is with this in mind that we have presented the European Green Deal and our digital strategy. And next week indeed, we will introduce our industrial strategy and our SME strategy. And let me take five thoughts out of those two to discuss briefly with you.
First of all - and you are absolutely right, President Gattaz -, we need to invest in Europe's most unique asset, and that is our Single Market. With its size, it can offer scale-efficiencies and purchasing power to match the U.S. and China. We should not underestimate that. But indeed, our Single Market has to catch up with a changing industry. All companies today are becoming, and have to become, digital. So the challenge for us is to truly digitalise now the Single Market, truly digitalise it. And our challenge is to make it work better for all these businesses. So for example, we have to invest in a new network of digital innovation hubs all across Europe. Or we want to set up European data spaces and European supercomputers. I am a big believer that we have a huge opportunity with these European data spaces.
We have started it already for the researchers. That is: You have a data space where you do not only store your own data but that enables you to get access to other researchers' data at the same time. And the same has to go for the business sector, the same actually has to go for governments. They have an enormous amount of data that are being never ever used - 85% of all our data we collect are never used or underused. So we should share them because there is a huge amount of innovation in it, of entrepreneurship, missed opportunities. And if we have these European data spaces, there is access to it. Another example: Medical researchers are able right now to use the potential of the supercomputers in Barcelona and Bologna to identify a cure to the Coronavirus. So in other words, thanks to European funds, we are funding the next generation of supercomputers for our businesses, for our researchers.
Second topic: We must get away from the old model where we take resources from the environment, put them in a product, just to turn them then into waste. Our current linear production methods create huge quantities of greenhouse gas emissions. If you just think of the mining of raw materials, the import, the transformation into a product, the landfill of waste we throw away - all this creates an immense amount of carbon dioxide and waste. If we want climate neutrality - and there are good reasons for it, it is an existential need - we definitely need to move on to the so-called circular models of production. You know the examples of re-use. For example, the cost of manufacturing mobile phones could be reduced by 50% per device if industry made phones easier to take apart, if we improved in reverse cycles, and if we offered incentives to return them.
The other example, you know it, high-end washing machines. They would be accessible for households, not by selling them, but by leasing machine loads. What is the difference? If you sell the machine, there is a certain incentive to be aware of the fact that at a certain time, it breaks and you exchange it for the next one. If you sell the machine load - so you just lease the machine to the household - the incentives are completely different. So the incentive for the manufacturer is that you develop a washing machine that is long-lasting, as long as possible, so that you can sell way more machine loads to the household. You sell the service; you do not sell the product anymore. And there is a huge incentive to recycle the product, and not to throw it away.
There is an environmental reason to choose the circular economy - without any question - but I think there is also a huge economic one. Because Europe relies massively on the import of raw materials from abroad. We import half of all our resources we consume, half of it we import. This is expensive - you know it better than me - it exposes companies to price fluctuations and it makes us dependant on others for a number of critical raw materials. Look at what is happening now with the Coronavirus, it just takes us two to three weeks, and we all here know what it does to our supply chains. So the circular economy is not only a matter of sustainability - it is also a matter of sustainability without any question - but also a matter of competitiveness and a matter of sovereignty.
Third topic: Europe needs an industry that remains competitive on the global stage while going green and digital. The European Union's competition law has served Europe well - without any question - by contributing to a level playing field. And we all know being competitive abroad requires competition at home. But in a fast changing world, not least with Europe embarking on its major twin transition, our competition rules will be revised to ensure they remain fit for today's world. For example, if we want to incentivise fossil-free productions, we cannot accept that at the same time, carbon-heavy products are reimported from abroad. This is neither sustainable, nor is it fair to our industry. Therefore, we are committed to developing a Carbon Border Adjustment Mechanism. Yesterday I have launched our impact assessment for that. All relevant sectors will be consulted in the most transparent and inclusive manner.
And there is another factor: If we want a level playing field in our Single Market, we must also react to subsidies that distort competition, not only when it comes to Member States but also when we look at our trading partners from other regions of this world. And this is why we want an Instrument on Foreign Subsidies. We want to remain open to foreign investors - without any question - but there has to be a certain level of reciprocity. We need this reciprocity. The same rights foreign firms enjoy within our borders, European firms should also enjoy abroad! I think this is a matter of fairness. And for that reason, I call on Member States and the European Parliament to finalise now the International Procurement Instrument that we need for that. We are an open economy - without any question - we are thriving in a global economy. But this openness should not be taken for granted. If we are faced with unfairness, we are ready to address that.
The fourth point: Europe must master the key technologies of tomorrow. If we build our technological sovereignty, we will also create new business opportunities for our companies. There is for example the story of our Battery Alliance that makes a very good example. And right in front of me sits the patron of our Battery Alliance, it is Maroš Šefčovič, the Vice-President. Batteries will be strategic in a cleaner and more digital environment. But Europe still relies massively on batteries that are entirely or partly made abroad. This is why we decided to join forces with Member States and the private sector.
And so the European Battery Alliance was born. It is thanks to it that the most innovative, long-lasting and clean batteries for electric cars will soon be ‘made in Europe'. The same model can be applied in other strategic sectors: just think of hydrogen to produce clean steel, think of secure 5G and 6G networks, think of AI-driven diagnostics in the medical sector or the robots for healthcare, think of the industrial Internet of Things, but also of course of cybersecurity, and there are many, many other examples. These technologies will be crucial for Europe's prosperity and security in the future. So we must guarantee our autonomy all along these value chains that are necessary to produce these topics. And in a more competitive world, this is not only an investment in our competitiveness, but it is also an investment in our own sovereignty.
Speaking of investment, this is the fifth point: Massive investments will be needed, both public and private. We want you to invest. But we want to invest with you also. And we want to make it easier for you to invest. I am talking about investment in research. I am talking about investment in new technologies. But also about investment in the deployment and the take-up of these technologies by companies of all sizes.
Talking about the European Green Deal. It is not so much about investing into basic R&D, because this takes 20, 30, 40 years until it is market-feasible. The technologies are out there already. We have them. But they are not deployable at the moment being, they are not market-feasible. So this is the point where we have to step in and help and invest and nurture. Or for example take hydrogen. Hydrogen will become key for the industrial sectors - we had it several times now cited today. But the market is not there yet to sustain its development and deployment in ready solutions. There was a need to stimulate investment across different sectors and industries. And for this reason, we created with the industry a Public Private Partnership on hydrogen. And today, Europe is one of the global leaders on hydrogen stations and fuel cell buses.
So we are now ready to expand this very positive model of innovation with a new generation of impact-driven Public Private Partnerships supported by the European budget. I think this is the combination we do need. We want to stimulate investment and we want innovation all across the value chain. We want to involve industries, be they large or be they small. We want to create lead markets for new technologies. And for that, if these are our goals, if we aim at that, we want to make life easier for investors. The European classification for sustainable investments - that is the first step to take. We will also strengthen the rules on disclosure of environmental information by companies, we will define high quality standards for green bonds. Yes, I know, this is a lot - but it is necessary. And we do all of this so that investors can identify what investment is sustainable and what investment is not. Because your investment decisions of today are vital to make the twin transition - the digital one and the green one - happen. And I fully agree with you, PresidentGattaz. You said that a stable and a predictable policy environment, stable and predictable, for you is key to foster investment.
Ladies and Gentlemen,
Europe has always been the home of industry and small and medium businesses. For centuries, it has been an industry pioneer for innovation. And for centuries has helped improve the way people around the world produce, consume and do business. Europe's business has powered our economy, it has provided stable living conditions for many. This is always the goal why we do all this. And it has created a social hub around which our communities are built that is stable and that is reliable - and this is the European way. Throughout its long history, industry has proven its ability to lead the change. Yes, it has been difficult sometimes, yes, the road has been bumpy - but in the very end, we have been able to lead change.
And it must do the same now as Europe's markets embark on the twin transition on digitalisation and on the European Green Deal. This is what will truly make a difference between success and failure. It will make the difference in our ability to join forces between public and private sector. We, as the European Union, have an essential role to play, we are aware of that - with investment, with regulations and with incentives. But it is Europe's business that must lead the transition. The only way to find solutions that work for all is to create them together.
A new business way for Europe has to be partially made in Brussels - without any question - but it cannot totally be made in Brussels. Our future will be co-designed and co-created with you. It is when we manage to join forces that we see Europe at its best. This is the essence of our social market economy. It has always been the essence of our social market economy - and I am convinced it will always be the essence of our social market economy the European way. Private investment and common good - this is the European way. Innovation and responsibility - this is the European way. Competitiveness and sustainability - this is the European way. This is the new industrial way for Europe we are thinking of. And I cannot wait to get to work towards it, with leaders like you.
And in this best sense: Long live Europe!