The European Union is gradually becoming less competitive in green value chains, implying that it is becoming less well-positioned to generate economic growth from these industries.
We show this using measures of EU specialisation in green exports, relative to the rest of the world. Behind this aggregate trend, there is wide variation across countries and technologies. Belgium, for example, has a good industrial base in batteries and wind power, while Italy, Germany and Poland are relatively more specialised than other countries in heat pumps. We compare countries in terms of green export diversity, specialisation and relatedness, revealing distinct technological strengths.
Most trade data is available only at the national level. To investigate regional patterns, we use a database covering more than €200 billion of announced site-specific European clean-tech manufacturing investment. This reveals similarly strong geographic specialisation across green value chains.
Together, the Growth Lab Greenplexity and Bruegel European Clean Tech Tracker databases highlight the importance of geography for industrial policy. Green value chains are fiercely competitive, and regions differ in the industrial capabilities they can draw on. When deploying public support to develop domestic green value chains, European policymakers should target investment in particular industries towards regions where the existing industrial ecosystems offer the best fit.
About the authors:
Ketan Ahuja is a Research Fellow at Harvard Kennedy School’s Growth Lab, where he leads a research programme on green growth.
Karan Daryanani is an economic analyst and data management fellow at Harvard’s Growth Lab.
Marie Jugé was a Research Analyst at Bruegel, where she focused on energy and climate policy.
Ben McWilliams is an Affiliate Fellow at Bruegel. He specialises in energy and climate policy.
Simone Tagliapietra is a Deputy Director at Bruegel. Since joining in 2015, he has focused on European Union climate, energy and industrial policy.