Green transition blocked by lack of partnership between industry and energy

The European energy transition (green transition), considered by many to be the continent's strategic asset to strengthen its competitive position on the global stage, is in danger of stagnating, due to the lack of mutual trust between industry and the energy sector, coupled with the absence of clear and stable rules to guide this profound transformation process, says Martijn Hagens, member of the Board of Directors of the Swedish company Vattenfall, in an editorial published yesterday in the German daily Tagesspiegel.

According to Hagens, the industry is hesitant to commit firmly to decarbonization as long as it is not guaranteed constant and affordable access to energy without fossil fuels, and energy suppliers do not invest in new technologies without clear and sustained demand. The energy expert argues that this vicious circle is blocking progress and threatening European climate goals, with direct effects on innovation and economic competitiveness.

The solution to overcome this impasse would be, according to the cited source, a close and transparent collaboration between industry, the energy sector and political decision-makers. The Vattenfall representative states that only through real partnerships and firm commitments can the current situation be overcome and the necessary momentum for the green transition be restored.

In this regard, Hagens offers as an example the joint projects that the company he represents is carrying out with German industrial giants BASF, SSAB, LKAB or Evonik, and states that one of the most effective instruments are long-term energy purchase contracts - Power Purchase Agreements (PPAs), which provide financial security to producers, reduce investment risk and stimulate the development of new renewable energy capacities.

For the industry, PPAs mean price stability, protection against market volatility and a direct means of achieving sustainability goals. In addition, the synchronization between supply and demand generated by these contracts creates a healthy energy ecosystem, conducive to investment and innovation. The cited source shows that, however, access to PPAs is not equal for all actors and specifies that start-ups, SMEs or companies in energy-intensive sectors, such as the steel, cement or refinery industries, face serious financial barriers. The lack of creditworthiness or initial capital limits the participation of these players in the energy transition. Hagens believes that the state can intervene decisively through credit guarantee mechanisms and targeted support to remove initial obstacles and states that, in the absence of such a support scheme, a large part of the European economy risks remaining outside the green transformation process.