According to McKinsey and the World Economic Forum, Europe excels in only four of fourteen technology sectors, including CCUS and quantum computing, while falling behind in key areas like hydrogen and AI. The continent faces a significant €700 billion investment gap, risking €2-4 trillion in lost GDP by 2040. The European Commission is addressing unfair trade practices by China, and recent AI investments in various EU nations attempt to bolster technological growth despite economic challenges.
Recent research by McKinsey and the World Economic Forum reveals that Europe is only competitive in four out of 14 technology areas. The competitive sectors are carbon capture utilization and storage (CCUS), circular technologies, engineered carbon removal, and quantum computing. Additionally, bioengineering and advanced connectivity are noted as leading investment and research domains. However, Europe lags behind in hydrogen, sustainable fuels, electrification, and renewables, among others such as artificial intelligence and cloud computing.
Semiconductor technology is another area where Europe struggles, ranking in the lower half despite its significance. The continent exhibits limited capabilities in high-value segments of the semiconductor value chain, particularly in chip design and manufacturing. To address this, Europe could implement chip procurement preferences for EU products and establish new certification processes for public and private procurement tenders.
Without addressing its technology investment gaps, Europe stands to lose €2-4 trillion annually in GDP contributions by 2040, surpassing the total current funding for key sectors such as Net Zero initiatives, defense, and healthcare. To combat these challenges, the European Commission has sought consultations at the World Trade Organization to mitigate unfair trade practices by China, particularly concerning intellectual property issues.
The Commission highlights that China has established courts to set global royalty rates for EU’s standard essential patents, which can pressure European companies to lower their rates worldwide, inadvertently enhancing access for Chinese manufacturers. Additionally, the European High Performance Computing Joint Undertaking recently selected seven proposals to develop AI factories in multiple EU countries, with a €1.5 billion investment, half of which is backed by the EU.
Despite these initiatives, the European economy remains under pressure nearly two years after the energy crisis and the US Inflation Reduction Act. The growth rate of EU economic output is projected to be below 1% in 2024, while public debt levels remain high, indicating substantial economic strain across the continent.
Original Source: www.gasworld.com
