Europe’s new industrial hope: Don’t just pick losers, create winners

There are dozens of other examples. In 2019 the EU set national targets for authorities to purchase a percentage of clean public transport vehicles. Since then, one of Europe’s biggest bus makers, Daimler, has signed contracts to build electric buses for Hamburg, The Hague, Osnabrück, Milan and Brussels. Demand for their Mercedes-Benz eCitaro “has risen steadily in recent years and remains strong,” said Kai Wolfer, a Daimler spokesman.

But these examples, while impressive, remain miniscule in the scheme of Europe’s multi-trillion euro annual spending on public goods, services and works.

On Wednesday, the Commission’s Clean Industrial Deal took a step toward changing that. The EU executive wants to create made-in-EU and sustainability criteria to give public buyers more than just a price point to make their final decisions. The Commission promised to make existing criteria simpler and more universal so “all levels of administration, from national to local, should be able to use them.” It also mentioned “targeted mandates,” such as those that have spurred the e-bus industry.

The policy pivot also arrives as European governments are digging deep to buy more military hardware, preparing for a world where they can longer rely on the U.S. and in which Russia is menacing EU borders. That means more public contracts and more chances to combine industrial and climate goals with national security, said Tagliapietra, the Bruegel economics professor. 

For instance, the EU could add green criteria to the steel used to build weapons, vessels and tanks. “While we increase our defense capabilities, we also create a new market for these green products,” Tagliapietra said. 

The steel industry is understandably supportive of this idea. “It would clearly be sort of absurd to buy any special steels from China or Indonesia to build, let’s say, a new EU tank model,” said Lucia Sali, spokesperson for the European Steel Association. But at this stage there is no certainty that governments will be mindful of the climate while buying weapons.