Annexes to COM(2022)289 - 2022 Strategic Foresight Report Twinning the green and digital transitions in the new geopolitical context

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dossier COM(2022)289 - 2022 Strategic Foresight Report Twinning the green and digital transitions in the new geopolitical context.
document COM(2022)289
date June 29, 2022
agreements and the Team Europe financial firepower to attract investment across the entire raw materials value chain assets in the EU and third countries.

4. The EU needs to strengthen social and economic cohesion along the transitions. Workers, companies, sectors, and regions in transition require tailored support and incentives to adapt. Social dialogue, investments for quality job creation, and timely development of partnerships between public employment services, trade unions, industry and educational institutions are key. This also calls for reinforcing social protection and the welfare state, including mechanisms to prevent or address in a targeted manner the negative impacts on low- and medium-income communities and households and fight against poverty, as well as employment rescue facilities and policies assisting labour market transitions to cope with shocks. Regional development strategies and investments, supported by cohesion policy, should underpin the twin transitions, while reducing economic, social and technological disparities, including environmental injustice. Seamless and secure connectivity, including in rural and remote areas, in combination with capacity and skills building, will be key to ensuring all citizens and businesses can benefit from twinning.

5. Education and training systems need to be adapted to the new socio-economic reality. This entails both learning skills to adapt to a rapidly transforming technological reality and labour market, as well as green skills and climate awareness to support value creation in the green transition and responsible citizenship. Ensuring that the twin transitions are fair to all depends on substantially increasing twinning-related social expenditure, e.g. in education and lifelong learning, within a just transition framework. Labour mobility across sectors and targeted legal migration need to increase. Supporting sustainable, ‘1.5-degree’ lifestyles, by engaging citizens and businesses, ensuring affordability, shaping policies and infrastructures animating them, will also be essential.

6. Additional investment should be steered into technologies and infrastructures supporting twinning. To strengthen the EU’s resilience and facilitate the twin transitions, targeted reforms and investments need to tackle vulnerabilities at national and EU levels. Relevant macro-economic and sectoral policies need to be closely coordinated. A further shift in investments towards long-termism, and sustainable assets is required. The EU will need to leverage additional private and public long-term investments in twinning, especially in R&I across critical technologies and sectors, uptake and synergies between technologies, human capital, and infrastructures. This requires an enabling framework. Completing the Banking Union and Capital Markets Union will be essential to increase the robustness of financial markets, mitigate possible future financial stability risks, and ensure deep and liquid financial markets. This includes promoting sustainable finance frameworks to increase private investments in sustainable projects. The EU taxonomy and the underlying ‘do no significant harm’ principle are an important step in this direction. Additional investments will require financing tools combining private and public resources. Multi-country projects could facilitate the pooling of EU, national and private resources. Green public and private procurement should be expanded to sustainable digital technologies. Subsidies for sustainable production and consumption should be considered. Social entrepreneurship and impact investment by private players will be important. Fiscal policies and taxation need to be adapted to the twin transitions, spare additional investment towards projects promoting them 60 , and provide the right price signals and incentives to producers, users, and consumers.

7. Steering the transitions requires robust and reliable monitoring frameworks. The four dimensions of competitive sustainability, i.e. fairness, environmental sustainability, economic stability, and productivity require an ambitious and integrated policy design that pays attention to both synergies and tensions. The needed shift towards a new economic model calls for an integrated approach to measuring and monitoring wellbeing beyond GDP, looking at current and future generations, in the EU and beyond. To guide political decisions that deliver on its full sustainable potential and to benefit from sustainable finance, a new and sound EU-level framework is needed for measuring both the enabling effects of digitalisation and its overall footprint in terms of greenhouse gas emissions and energy and resource use, including minerals and rare earths. 61  Having accurate, reliable information and official statistics can help citizens, businesses, and public authorities take informed decisions. Ultimately, data monitoring can help the EU assess whether additional measures are necessary.

8. A future-proof and agile EU regulatory framework, with the single market at its heart, will be conducive to sustainable business models and consumption patterns. The single market and its various dimensions, e.g. on data or energy, need to continuously evolve to accompany the twin transitions. A better regulatory framework, with incentives for innovation, is needed to promote circularity, create enabling markets, strengthen industrial ecosystems and ensure diversity of market players. Administrative obstacles should be systematically removed, to facilitate twinning-related projects and infrastructure. The rising role of intangible assets will require a fit-for-purpose intellectual property framework. EU policymaking should further exploit the use of digital solutions, such as digital twins, artificial intelligence for forecasting, or modelling in impact assessments. The twinning could be better analysed in evaluations of existing legislation, by looking at combined effects. 62 Consumers should be protected against deceptive practices, such as greenwashing or planned obsolescence. Benefits and challenges of the transitions need to be discussed with the public. Participation in decision-making could be enhanced with digital technologies or living labs. The use of artificial intelligence to support citizens’ engagement in policymaking, as has been the case for the digital platform developed for the Conference on the Future of Europe, should be further explored.

9. Setting standards will be key for twinning and ensuring the EU’s first-mover advantage for competitive sustainability. Product design, based on the ‘reduce, repair, reuse and recycle’ principle should become mainstream. Current action to ensure the sustainability of physical goods in the EU needs to be matched with standards for all sectors, to reverse overconsumption and planned obsolescence. The recent Commission proposals 63 to oblige traders to provide consumers with information on the durability and reparability of products could provide a solid basis for this. The EU must develop a more strategic approach to international standardisation activities in relevant global formats. 64  To ensure their implementation, international standards need to be matched with tracking and traceability. For instance, establishing a global standard for batteries could require a digital passport to track the ethical and environmental footprint of their components. Using standards to ensure that twinning technologies and infrastructures are interoperable will also enable the integration of EU partners in the implementation process.

10. A stronger cybersecurity and data sharing framework will be needed to unlock the potential of twinning technologies. Improved interoperability between different owners, generators, and data users in the EU, including national and subnational information systems, will facilitate data sharing by different actors: public authorities, businesses, civil society, and researchers. A strengthened and more secure data sharing framework that clarifies ambiguity on liability and ownership when transferring data will protect people and businesses; it will also help build trust and acceptance in twinning technologies. Common approaches to cybersecurity benchmarks for products and services, including comprehensive sets of rules, technical requirements, standards, and procedures will be important. Moreover, the resilience of critical entities and infrastructures needs to be strengthened with an all-hazards EU framework to help Member States ensure that critical entities can prevent, resist, and recover from disruptions. Affordability of cybersecurity technologies will also be key.


VI. Conclusions

Better understanding the interactions between the green and digital transitions is key for successful twinning, amidst various future megatrends and unforeseen events. The areas of action presented in this Communication (see above) respond to the need of maximising the synergies and addressing tensions between the twin transitions. This requires a dynamic approach to anticipating change and adapting policy responses, while firmly maintaining the course towards long-term objectives. In this way, by 2050 a successful twinning will support a new, regenerative, and climate-neutral economy, cutting the levels of pollution, restoring biodiversity and natural capital, enabled by sustainable digital and other technologies. It will help to position the EU as a champion of competitive sustainability and strengthen its resilience and open strategic autonomy. This will go hand in hand with a just transition benefitting all people, communities, and territories, in Europe and beyond.

The next annual Strategic Foresight Report will focus on the key upcoming challenges and opportunities that Europe will face in the decades to come, providing strategic insights relevant for strengthening the global role of the EU.


(1)

     The 2021 Strategic Foresight Report identified climate change and environmental degradation, digital hyperconnectivity and technological transformation, alongside pressure on democracy and values, as well as shifts in the global order and demography, among the key megatrends that will impact the EU’s open strategic autonomy in the coming decades. (COM (2021) 750 final).

(2)

     This Communication builds on the Joint Research Centre’s Science for Policy report ‘Towards a green and digital future. Key requirements for successful twin transitions in the European Union’ [https://publications.jrc.ec.europa.eu/repository/handle/JRC129319]. The preparation process included consultations with experts and stakeholders, publication of a call for evidence, discussions with partners from the European Strategy and Policy Analysis System, and Member States in the EU-wide Foresight Network.

(3)

     Fit for 55': delivering the EU's 2030 Climate Target on the way to climate neutrality, COM(2021) 550 final.

(4)

     The ability of the EU’s economy, industrial ecosystems, and companies to move towards a sustainable, productive, fair, and stable macroeconomic model, enabled by digital and clean technologies, making Europe a transformational frontrunner and a competitive first-mover at global level. (COM(2019) 650 final).

(5)

     A digital twin is a virtual representation of an object or system that spans its lifecycle, is updated from real-time data, and uses simulation, machine learning and reasoning to help decision-making. The development of the EU Destination Earth (DestinE) and its digital earth twins is key to predicting the effects and building resilience to climate change. In addition, the Digital Twin of the Ocean will help to design the most effective ways to restore marine and coastal habitats, support a sustainable blue economy, mitigate, and adapt to climate change.

(6)

     35 countries are collaborating to build the world's largest magnetic fusion device, to prove the feasibility of fusion as a large-scale and carbon-free energy source based on the same principle that powers stars.

(7)

     Freitag. C, et al (2021). The real climate and transformative impact of ICT: A critique of estimates, trends, and regulations, Patterns 2.

(8)

     Behavioural responses to improved efficiency that counterweight potential savings.

(9)

     E.g. according to Andrae, A. (2022), Net global effect of digital - power and carbon, the ICT electricity footprint could grow from 1988 terawatt-hours in 2020 to 3200 in 2030.

(10)

     Council of the European Union (2022). Metaverse- virtual world, real challenges.

(11)

     With the European Chips Act (COM(2022) 45 final), the EU aims to address semiconductor shortages and strengthen its technological leadership, i.a. by increasing the production capacity to 20% of the global market by 2030.

(12)

     Discarded products with a battery or plug (United Nations Institute for Training and Research https://ewastemonitor.info/gem-2020/ ).

(13)

     WEEE Forum (2021): https://weee-forum.org/ws_news/international-e-waste-day-2021/ .

(14)

     ITU (2020). The Global E-waster monitor.

(15)

     EIT Digital (2022). Digital Technologies and the Green Economy report.

(16)

     EEA (2022). Economic losses and fatalities from weather- and climate-related events in Europe.

(17)

     In 2019 they represented the following part of greenhouse gas emissions per sector in the EU: energy supply 27%; domestic transport 23%; industry 21%; residential and commercial 12%; agriculture 11%. (European Environmental Agency greenhouse gases data viewer 2021).

(18)

     International Energy Agency (2021).

(19)

     REPowerEU Plan, COM(2022) 230 final.

(20)

COM(2022) 230 final.

(21)

     Business model where energy service providers do not simply offer a form of energy but rather a ‘turn-key energy product’ such as keeping the temperature in a building in a certain target range.

(22)

     Compared with 2015, based on the Fit for 55 MIX scenario. European Commission (2021), Policy scenarios for delivering the European Green Deal.

(23)

     For example, solid-state, cobalt-free lithium-ion, or those using DRX materials (disordered rock salts with excess lithium, which allow battery cathodes to be made without nickel or cobalt).

(24)

     SWD(2021) 601 final.

(25)

     International Energy Agency (2020).

(26)

     United States Environmental Protection Agency (2021).

(27)

     Computerised system gathering and processing data and applying operational controls over long distances.

(28)

     4D-printed objects can change shape or self-assemble over time if exposed to a stimulus such as heat, light, water, magnetic field, or other form of energy that activates the process of change.

(29)

     Source: Eurostat. The COVID-19 pandemic showed growing interest in moving to rural areas. Whether this is a short-lived or could remain a longer-term trend will depend, among other things, on the connectivity of rural areas. See more: A long-term Vision for the EU’s rural areas (COM(2021) 345 final) and Scenarios for EU rural areas 2040, https://data.europa.eu/doi/10.2760/29388 .

(30)

     COM(2021) 802 final.

(31)

     COM(2021) 558 final; COM(2021) 802 final.

(32)

     COM(2020) 662 final. 

(33)

     IPCC (2022). Impacts, Adaptation and Vulnerability. Working Group II Contribution to the Intergovernmental Panel on Climate Change Sixth Assessment Report.

(34)

     Deliberately sourcing critical materials, goods or services with allies who share the same values.

(35)

     Strategic dependencies and capacities, SWD(2021) 352 final; EU strategic dependencies and capacities: second stage of in-depth reviews, SWD(2022) 41 final. 

(36)

     China alone accounts for 86% of the global supply of neodymium. Palladium is mostly provided by Russia (40%), and tantalum by the Democratic Republic of the Congo (33%). European Commission (2020). Critical Raw Materials for Strategic Technologies and Sectors in the EU: a foresight study.

(37)

     European Commission (2020). Critical Raw Materials for Strategic Technologies and Sectors in the EU: a foresight study.

(38)

     Metals for Clean Energy: Pathways to solving Europe’s raw materials challenge, KU Leuven and Eurometaux, 2022.

(39)

     Danino-Perraud R. (2021), Géoéconomie des chaînes de valeur: les matières premières minérales de la filière batterie, Études de l’Ifri, Ifri.

(40)

     E.g. the EU could meet 52% of lithium demand, 49% for nickel and 58% for cobalt in 2050 for electric mobility by recycling end-of-life batteries. Rizos, V., Righetti, E., (2022) Low-carbon technologies and Russian imports: How far can recycling reduce the EU’s raw material dependency?, CEPS Policy Insight.

(41)

     Metals for Clean Energy: Pathways to solving Europe’s raw materials challenge, KU Leuven and Eurometaux, 2022.

(42)

     Recycling can vastly reduce energy consumption by a theoretical factor of 27 for steel and a practical factor of 30 for aluminum. (Komiyama, H. (2014), Beyond the Limits to Growth: New Ideas for Sustainability from Japan, Science for Sustainable Societies).

(43)

     For example, in quantum computing 50% of the top companies are in the US, 40% in China and none in the EU. In 5G, China captures nearly 60% of external funding, the US 27%, Europe 11%. In artificial intelligence, the US captured 40%, Europe 12% and Asia (including China) 32%. In biotech in 2018–20, the US spent $260 billion, Europe $42 billion, China $19 billion. McKinsey Global Institute (2022). Securing Europe’s future beyond energy.

(44)

     Angyalos, Z. & Botos, S. & Szilagyi, R. (2021). The importance of cybersecurity in modern agriculture, Journal of Agricultural Informatics.

(45)

     The Economist Intelligence Unit (2022). Five ways in which the war in Ukraine will change business.

(46)

     Boese, V., et all (2022). Democracy Report 2022: Autrocratization Changing Nature? Varieties of Democracy Institute, V-DEM.

(47)

     This includes reducing inequality, lowering carbon emissions and tackling hunger, where progress stalled or reversed. UN (2021). Progress towards the Sustainable Development Goals: report of the Secretary-General.

(48)

     Either due to the cost, or because the services do not exist.

(49)

     This also includes taking into account gender-specific consumption and investment patterns.

(50)

      https://wir2022.wid.world/chapter-6/  

(51)

     European Commission (2021). The Future of Jobs is Green.

(52)

     United Nations Environment Programme (2020). Emissions Gap Report 2020.

(53)

     International Energy Agency (2021). Net zero by 2050 - A Roadmap for the Global Energy Sector.

(54)

     Projected figures estimate that global data volume will increase 530%, from 33 zettabytes in 2018 to 175 zettabytes in 2025, (COM(2020) 66 final).

(55)

     One of the world’s largest funding programmes for commercial demonstration of innovative low-carbon technologies. It will provide around EUR 38 billion in support up to 2030, depending on the carbon price.

(56)

     COM(2021) 662 final.

(57)

     COM(2022) 600 final.

(58)

     In line with the Communication “A competition policy fit for new challenges”, COM(2021) 713 final.

(59)

     The RePowerEU Communication stresses that the EU must urgently provide, including through a legislative proposal, an adequate framework to support Member States’ and industry’s efforts in this area.

(60)

     The recent proposal to introduce a debt-equity reduction allowance and to limit the deductibility of interest for corporate tax purposes (COM(2022) 216), will have an important role in fostering the twin transitions.

(61)

     Some efforts in this direction are being made under the European Green Digital Coalition.

(62)

     Recommendation of the Fit for Future Platform draft opinion on “How to favour interconnectivity between the digital and green transition, including through simplification”.

(63)

     COM(2022) 143 final.

(64)

     In line with the “EU Strategy on Standardisation”, COM(2022) 31 final.