European firms must double low carbon investments to meet net-zero target

02 March 2020 by Grace Coleman
blog author

​European companies must double their low carbon share of total capital expenditure to achieve net-zero emissions by 2050, according to a new report.

Despite reporting a total of €124 billion in new low carbon investments last year, the expenditure is just 12 per cent but should be increased to 25 per cent to meet the EU’s new climate target for 2050.

This is according to non-profit organisation CDP and global management consulting firm Oliver Wyman, who have released the report titled Doubling Down: Europe’s Low Carbon Investment Opportunity.

The report found 882 European companies reported €59 billion of new low carbon capital investments and €65 billion in new research and development (R&D) spend last year.

Electric vehicle technologies in R&D was one of the largest areas of new investment (€43 billion) alongside capital investment in renewable energy (€16 billion). Volkswagen AG expects battery-electric vehicles to make up 25 per cent of annual sales, bringing in a financial opportunity of €59 billion.

Energy grid infrastructure also saw investments of €15 billion for energy grid infrastructure.

The companies featured in the report represent around 76 per cent of European market capitalisation, with annual emissions equivalent to three quarters of the EU total.

The report notes a clear business case for making new green investments. The 882 companies contributed €40 billion to bottom lines across the board in 2019 and current company investments are expected to save at least 2.4 gigatons of lifetime emissions. This is more than the annual emissions of the UK, Germany, France, Italy and Poland combined.

Steven Tebbe, managing director of CDP Europe, said: “European companies are making significant investments in transformational low carbon technologies that can help the EU deliver its climate neutrality target by 2050.

“Across many types of investment, the business case for transitioning businesses onto a low carbon pathway is clear, and the opportunities vast. But overall current investment levels are still short of putting European firms on track for net zero emissions.

“For industries where decarbonization is more challenging, there is a serious need for financial markets and policymakers to create better conditions for low carbon investment and deliver stronger incentives to drive investment into breakthrough technologies, where capital expenditure is often high and returns long-term.”