The EU’s comparative advantage in the “clean-energy arms race”

Petter Dahlström (), Hans Lööf (), Fredrik Sjöholm and Andreas Stephan
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Petter Dahlström: Royal Institute of Technology
Hans Lööf: Royal Institute of Technology

The Annals of Regional Science, 2025, vol. 74, issue 1, No 15, 18 pages

Abstract: Abstract The net-zero agreement on carbon emission from Paris 2015 gives a key role to fossil-free energy technologies with an expected multiple growth rate over the coming decades, when successively replacing oil, coal, and gas. In this paper, we examine the EU’s comparative advantage in the evolving trade war in clean-energy and show that the EU excels in developing strategic net-zero technologies, but often falls short in manufacturing the final products. The EU’s Net-Zero Industry Act aims to encourage investments in the production of strategic energy products and increase self-sufficiency to meet 40% of low-carbon technology needs by 2030. However, this may not fully address long-term challenges relating to growth, job creation, decarbonization, and geopolitical resilience. Supporting innovative producers could be a more effective policy to capitalize on the EU’s competitive advantage in the clean- energy sector.

JEL-codes: F02 O18 Q50 R10 (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1007/s00168-024-01343-5

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