Green Investments: A New Growth Driver for Europe's Economy

By Mika Horelli, BRUSSELS – I can't avoid the temptation to write something positive like this on the first day of the year. Please, and at the same time I wish you an interesting new year 2025. 


The European Green Deal has transformed the way the region approaches economic growth and competitiveness. The commitment to achieving climate neutrality by 2050 is not only an environmental goal but also a strategic economic decision aimed at strengthening the EU's position as a global economic powerhouse. With at least €1 trillion (£850 billion or $1.1 trillion) in sustainable project investments on the table, this initiative presents an unprecedented opportunity to align climate goals with economic success.


Green investments are not merely a solution to the climate crisis – they are also a source of competitive advantage. Innovation, job creation, and new business opportunities are flourishing in sectors that promote sustainable growth. For instance, the renewable energy sector has been one of the fastest-growing job creators globally for years. The EU's focus on developing renewable energy and sustainable technologies is strengthening European companies’ positions in international markets.


In Finland, the Confederation of Finnish Industries (EK) has highlighted the significance of green investments for the national economy, but these insights resonate within the broader EU context as well. If, for instance, one-fifth of the green projects listed by EK are realized, the effects could be substantial: €3 billion (£2.6 billion or $3.3 billion) added to Finland's GDP annually and 12,000 new jobs created each year. Similar development pathways can be observed in other technologically advanced EU countries.


Concrete examples abound across Europe. In Finland, Neste has developed renewable diesel and aviation fuel, which reduce CO2 emissions and promote sustainable development. Another example is Virta, which provides smart electric vehicle charging solutions, connecting consumers, service providers, and energy companies into a single system. This not only reduces transportation emissions but also supports broader digital transformation.


Neighboring Sweden has also taken a strong position in advancing the green transition. Swedish company Northvolt is one of Europe's leading battery production players, aiming to manufacture responsibly sourced batteries using renewable energy. The company exemplifies how the EU can reduce its reliance on foreign battery manufacturers while creating high-quality jobs in Europe.


Denmark, on the other hand, has been a pioneer in wind power. Vestas Wind Systems, the world's largest manufacturer of wind turbines, has demonstrated how renewable energy technologies can be both environmentally friendly and economically viable. Denmark has also developed offshore wind farms that serve as a model for other EU countries.


Strategic Investments by the EU


Building a competitive green economy requires investments in skills and infrastructure. Across the EU, businesses and education systems must adapt to meet new demands. Like Finland's Business Finland, the EU at large emphasizes that success depends on the right education and the promotion of innovative solutions. To this end, the EU has established various funds, such as the Just Transition Fund, which aims to ensure that no region is left behind in the development process.


Additionally, the EU's competitiveness is reinforced by integrating green projects into a broader economic and political strategy. For instance, the Green Deal Industrial Plan aims to support the production and innovation of sustainable products while encouraging companies to invest in green technology.


The green transition also offers significant growth opportunities for small and medium-sized enterprises (SMEs). According to EK’s research, nearly 50% of industrial companies in Finland believe that the green transition will boost their growth. Similar findings have been observed elsewhere in Europe. For example, in Germany, many SMEs have successfully combined traditional industries with sustainable innovations to strengthen their competitive edge.


However, SMEs face challenges such as a lack of capital and expertise. This is why support mechanisms provided by the EU and national governments, such as loan guarantees and training programs, are crucial. The importance of collaboration and clusters, such as Denmark’s Clean Cluster, is also notable in supporting SMEs during the green transition.


The green transition is not just an economic necessity but also an opportunity to position Europe as a leader in sustainable growth in the global economy. For Finland, this development offers a unique chance to solidify its role as a technological frontrunner, but the same opportunities are available to all technologically advanced EU countries. By succeeding in this transition, the EU cannot only strengthen its competitiveness but also demonstrate to the world how economic and sustainable practices can go hand in hand. The potential of the green transition extends beyond economic goals; it can also lay a sustainable foundation for the well-being of future generations.

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