Report
The pitfalls in Europe’s rapid energy transition
Europe has decided to carry out a very rapid energy transition, with reductions in net CO 2 emissions (from 1990 levels) of 55% by 2030 and 100% by 2050. What are the pitfalls to avoid in this rapid energy transition? Significant destruction of capital and skills, leading to lower potential GDP. Unfortunately, this may be impossible to avoid. Similarly, drastic changes to the structure of jobs resulting in both structural unemployment and hiring difficulties; Imports of renewable energy equipment from the rest of the world, as opposed to local manufacturing, which would eliminate any reshoring effect linked to the cessation of fossil fuel imports; A decline in Europe’s cost competitiveness, should its border adjustments be insufficient to prevent it; An increase in income inequality due to higher energy prices, if it is not prevented by targeted public transfer payments. If these pitfalls are not avoided, there will be a high risk of public opinion rejecting a rapid energy transition.
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Natixis
Based across the world’s leading financial centers, Natixis CIB Research offers an integrated view of the markets. The team provides support to inform Natixis clients’ investment and hedging decisions across all asset classes.
Patrick Artus
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