Strategic Perspectives

European Commission President von der Leyen announced that the upcoming Electrification Action Plan will include an “ambitious electrification target”. This is an important shift in the EU’s approach to electrification, now making it a central instrument for delivering European energy security, technology leadership, and industrial resilience. In a new analysis, we explore how the EU can use electrification to strengthen competitiveness, resilience, and energy security, including by: 🔹 Establishing a binding electrification target of at least 50% by 2040, which could be translated into binding national trajectories while allowing Member States flexibility on sectoral priorities. 🔹 Anchoring this target within the Energy Security Framework as a core energy security instrument, to enshrine it in legislation before the 2027 electoral cycle. 🔹 Using the Electrification Action Plan to unlock short-term enabling measures, notably an “electrification first” principle for EU funding and the ETS, as well as a gradual rebalancing of gas and electricity taxation. Read more 👉 https://lnkd.in/e4KRrZmV

€16 billion is the record level of Chinese investment in Europe reached in 2025. Major Chinese industrial projects are taking shape across Europe, from battery plants in Slovakia and Spain to solar panel manufacturing facilities in France and Poland. Europe now attracts almost a quarter of all Chinese investment abroad, according to Rhodium Group and Mercator Institute for China Studies (MERICS). The automotive industry accounts for half of the investment. ▶️ Is this the result of the “Made in Europe” policy currently being discussed? Well, it probably plays a role. Chinese companies have seen the US market closing and need to maintain access to the EU market, even if that means investing locally. Many anticipate that Europeans will implement local content policies (#IAA), as many of the world’s major economies are already doing. However, let’s be clear: this will only continue if “Made in Europe” refers to the European Economic Area. If it includes other regions, Chinese investors will always have a stronger incentive to choose countries such as Morocco or Turkey while still benefiting from access to the EU market. ▶️ Is this good news for Europeans? Yes, under certain conditions. China is a leading technological powerhouse and could bring major added value to the European economy through the transfer of technology and know-how. However, the current trend is often to build assembly plants in Europe that import most components and do not meaningfully contribute to local value chains. This is the case for some projects in Hungary, which are primarily designed to circumvent potential “Made in Europe” policies rather than create substantial jobs and value for the local economy. This is exactly why Europe needs an effective “Made in Europe” policy, coupled with clear conditions on foreign direct investment in critical sectors. Such a framework can strengthen the position of European players when negotiating joint ventures with Chinese companies and help ensure that real value and jobs are created in Europe. In other words: a shared technological partnership.

Some weeks just won’t stop reminding us of what is at stake behind the debates on industrial policy in the EU. First, on Tuesday, Lisa O’Carroll at The Guardian published a revealing article about a new China shock for European industry, highlighting very high levels of imports in various industries, gradually making EU production uneconomic. The consequence is a massive decrease in manufacturing jobs and a worrying increase in the EU's industrial dependence. Then, on Wednesday, the French cleantech ecosystem received bad news: one of the country’s flagship gigafactory projects is throwing in the towel. I recommend reading CARBON's press release to understand why. Spoiler alert: it has to do with demand for EU products and EU industrial policy. Finally, still on Wednesday, it was reported that Chinese Foreign Direct Investment rose to a 7-year high in 2025 in Europe, with a focus on the automotive industry (Rhodium Group, Mercator Institute for China Studies (MERICS)). At the same time, Stellantis and Dongfeng Automobile Co., Ltd. announced that they had reached an agreement to produce Dongfeng cars out of Stellantis’ production site in Rennes, in France, illustrating the tendency. The EU’s industrial reality is evolving extremely fast - a swift policy catch-up is crucial to protect jobs and promote independence.

L'optimiste qui veut soutenir et protéger le « made in Europe ». Avons-nous le choix ? La course à l'industrie verte est lancée et le reste du monde n'attend pas gentiment les Européens pour prendre les devants, attirer les investissements, créer les emplois et dominer les chaînes de valeur. Il en va de même pour l’industrie traditionnelle : sans protection, elle ne peut plus investir en Europe. Dans un monde où la Chine impose ses surcapacités et sa suprématie technologique, tandis que les États-Unis, l'Inde et le Brésil protègent leurs marchés, l'Europe paraît bien en retard. Cela a un coût : la désindustrialisation. ▶️ 100 000 emplois ont été perdus en Allemagne en 2025. ▶️ De nombreux projets industriels sont à l'arrêt. Le projet Carbon, de fabrication de panneaux solaires dans le sud de la France, en est le dernier exemple. Faute de marché pour le solaire made in Europe, l'usine n'ouvrira pas ses portes. Certains choisissent les tarifs douaniers, l'Europe peut être plus intelligente et faire le choix d’une préférence européenne pour chaque euro d’argent public dépensé. C'est un filet de sécurité pour l'industrie qui investit, innove et crée de l'emploi en Europe. La promesse que la décarbonation peut conduire à la réindustrialisation. C'est le combat que je mène avec Strategic Perspectives depuis deux ans. Nous avons désormais une loi d’accélération industrielle (#IAA) qui peut permettre de faire aboutir le made in Europe. Merci au Le Nouvel Obs et à Morgane BERTRAND pour ce portrait (lien en commentaire). Quel honneur 🙏 .

Europe’s new gold medal? Becoming the world’s largest volatility importer 🏅 In 2025, the Union imported a record 146 bcm of liquefied natural gas (LNG) according to the EU Agency for the Cooperation of Energy Regulators (ACER). The US supplied 58% of those imports. That comes with a price. Because LNG is globally traded, the EU’s gas prices are increasingly shaped by supply disruptions, shipping bottlenecks and geopolitical tensions. The Union reduced its reliance on Russian pipelines after 2022, but largely by globalising its external dependency. Electrification can change this equation. At Strategic Perspectives, our modelling shows that pushing EU electrification toward 50% by 2040 could allow for a near-complete phaseout of LNG imports between 2030 and 2035 — while delivering net economic benefits. And help resolve a key paradox of Europe’s energy transition: its electricity system is increasingly domestic while its gas system grows more globally exposed.

 ⚡ The electrification race is on, and Europe has ground to make up. China is accelerating the shift away from fossil fuels across its economy. Europe, meanwhile, has kept electrification at around 23% of final energy consumption, and more than half of its energy still comes from imported oil, gas and coal. Reaching 50% electrification by 2040 would cut fossil fuel import costs by an estimated €43 billion per year and give European industry access to lower, more stable energy prices. The European Commission's upcoming Electrification Action Plan, due on 10 June 2026, is an opportunity to set a binding EU-wide target backed by clear national pathways, faster permitting, and investment incentives across transport, buildings, and industry. The technology is ready: wind turbines, industrial heat pumps, grids and electric mobility infrastructure are available and largely produced within Europe. The question now is how fast governments and industry move to deploy them. Read more in our report 👉 https://lnkd.in/ez828_ty

“Without a demand of its own, Europe cannot sustain a credible posture abroad”. The words of Mario Draghi’s Charlemagne Prize speech are an important reminder of the need for a unified European industrial policy to address the manufacturing crisis. After a sobering assessment of the current international order, citing the fact that other major economies are making “a mockery of the idea of a global level playing field” through their own industrial policies, Mario Draghi insists on the importance of internal depth to compete internationally. Specifically, he highlights the role of internal demand as essential for Europe to “sustain a credible posture abroad”. And calls for a Made-in-Europe policy to use European demand more deliberately and support certain industries, including cleantech. If the EU wants to turn the tide of deindustrialisation and compete internationally, it cannot continue to be the only economic power that does not use its taxpayer money to support its own strategic value chains. Or as Mr Draghi puts it: “Europe cannot afford ideological rigidity”. Link to the speech in the comments.

Germany’s energy transition is often hailed as a failure. The numbers say otherwise 🇩🇪 In 2025, renewables generated around 62% of Germany’s electricity, up from just 6% in 2000. Over the same period, fossil fuels fell from 62% to 36% (Ember). But there is a catch. Electricity still represents just one fifth of Germany’s final energy consumption (Arbeitsgemeinschaft Energiebilanzen e.V.). That means heating, transport and much of industry still run largely on fossil fuels, while around 95% of gas consumption remains imported. This is precisely what much of the debate misses. Germany’s challenge is no longer only to decarbonise power generation. It is to electrify one of Europe’s largest industrial economies fast enough to escape structural dependence on fossil fuels. That takes electrification. And it is where the EU’s energy transition gets more difficult.