New research indicates Europe is only competitive in four out of fourteen technology sectors: CCUS, circular technologies, engineered carbon removal, and quantum computing. To address a €700 billion investment shortfall, Europe must focus on improving performance in underperforming sectors and confront trade challenges, particularly regarding China. New AI factories signify progress, but ongoing economic struggles persist.
Recent research from McKinsey and the World Economic Forum reveals that Europe is competitive in only four of fourteen technology sectors, necessitating a €700 billion investment to close the gap. The sectors where Europe excels include carbon capture utilization and storage (CCUS), circular technologies, engineered carbon removal, and quantum computing. Other fields such as bioengineering and advanced connectivity also show European leadership.
Conversely, areas like hydrogen, sustainable fuels, electrification, and renewables rank poorly. Emerging sectors like the future of mobility, artificial intelligence (AI), and cloud and edge computing are similarly underperforming. Semiconductors are at risk as well, lacking clear leadership in high-value segments like chip design and manufacturing.
To address the semiconductor issue, Europe could establish chip procurement preferences for locally produced goods and introduce a new EU certification for chips in public and private contracts. Without action, technological shortfalls may result in €2-4 trillion in lost GDP contributions annually by 2040, surpassing current European funding levels for net-zero initiatives, defense, and health care.
In response to challenges from China, the European Commission has reached out to the World Trade Organization (WTO) to address unfair trade practices impacting intellectual property. The Commission highlighted concerns over China’s ability to set binding international royalty rates for EU essential patents, which pressures European companies to reduce royalty fees significantly, thus harming their competitiveness.
The European High Performance Computing Joint Undertaking (EuroHPC) has selected seven sites in Spain, Italy, Finland, Luxembourg, Sweden, Germany, and Greece to launch the first AI factories, representing a total investment of €1.5 billion. Half of this funding will come from the EU through the Digital Europe Programme and Horizon Europe to enhance AI infrastructure.
Despite previous disruptions from the energy crisis and the U.S. Inflation Reduction Act, the European economy continues to struggle, with 2024 economic output growth projected to be below 1% and public debt levels remaining elevated.
Europe faces immense challenges in technology competitiveness, only leading in four out of fourteen sectors. To avoid substantial economic losses, strategic investment and policy measures are crucial, particularly in manufacturing and intellectual property realms. Collaborative initiatives like the AI factories signal hope, but greater focus and resources are needed to bridge existing gaps and stimulate economic growth.
Original Source: www.gasworld.com
