The "telluric changes" in the European Union

26-10-2022 | News

The European Commission places sustainability and innovation objectives at the center of its 2022 strategic forecasts and invites Member States to create the “ministers of the future”.

Harvard Business Review Italy editorial staff

A careful examination of future trends in each field. This is the program that the European Commission is preparing to intensify for the next few years, given that “The world is experiencing changes telluric geopolitics, which strengthen the megatrends that already affect the EU ”. This is what we read in strategic forecast report adopted by the European Commission for 2022, where it is clearly stated that, in the new geopolitical context, it is necessary to carry out an exercise of exploration of the future by promoting a strategic culture that allows to improve the process of elaboration of EU policies. And where the proposal to establish gods is reiterated ministers of the future in each Member State that network with each other.

With respect to the strategic forecasts, it will then be possible to carry out checks on the adequacy and consistency of the legislative proposals, so as to ensure that each proposal is "suitable for the future, taking into account, for example, the emerging megatrends in the green, digital, geopolitical and socio-economic dimensions" .

There first edition of the strategic forecasts was launched in September 2020 and resilience was identified as a compass for EU policies. The Jrc (Joint Research Center of the Commission) had defined gods dashboards (dashboard) of resilience illustrating the vulnerabilities and ability of each Member State to plan policies. Vulnerabilities and capabilities are measured by a series of indicators linked to 14 megatrends selected as significant and decisive for the future of Europe. The same monitoring indicators of the SDGs are recognized among the evaluation elements of the resilience dashboard. The latter is then declined in four dimensions:

  1. social and economic,
  2. green,
  3. digital,
  4. geopolitics.

Each dimension has its own definition aimed at achieving a goal with its own set of indicators.

Concrete long-term goals

The strategic forecast 2022, elaborated on the basis of the Jrc study towards a green and digital future, merges two of the elements of resilience defined in the 2020 dashboard: the resilience green and the resilience digital, with the aim of exploring how the two transitions can reinforce each other. The transitions are framed, in terms of concreteness, in the geopolitical context (fourth dimension of resilience), as redetermined by the Russian invasion in Ukraine which strongly pushes the need to accelerate and strengthen theopen strategic autonomy of Europe. Not secondary is the size of the resilience social ed economic, at the center of the analysis and proposals. The 2022 strategic forecast aims to achieve concrete results in 5 areas:

  • Social: ensure a just transition so that society as a whole reap the benefits of transitions, increase social commitment to the need for change through awareness and debate, ensure privacy and the ethical use of technology;
  • Technological: implement innovative infrastructures, build a reliable and coherent technological ecosystem favoring interoperability, ensure the availability and security of data;
  • Environmental: avoid rebound effects through awareness raising and mechanisms that avoid unwanted side effects from the implementation of green / digital solutions, reduce the environmental footprint of green / digital solutions;
  • Cheap: create market rules that internalize the environmental costs of products and favor long-term investments, ensure the diversity of market players avoiding the domination of a few players, favoring a healthy, competitive and innovative economic environment, inclusive of SMEs and start-ups, develop the necessary skills by ensuring the availability of an adequate number of experts to guide innovation;
  • Politicians: implement adequate standards that guarantee interoperability and prevent technologies from becoming obsolescent before their end of life, ensure policy coherence by facilitating cooperation and innovation while avoiding unnecessary complexity, channeling investments towards transitions.

They come reconfirmed the objectives of the transitions: the green transition to respond to the emergency of the climate crisis and the loss of biodiversity by recalling the acts of the united nations calling for immediate action to avoid catastrophe, the digital transition for the potential to increase prosperity and help solve the social challenges of the our time - addressing the risks arising from the EU's dependence on non-European technologies and service providers and its dependence on a few large technology companies.

The Jrc highlights as a approach integrated to the challenges of achieving the success of twin transitions it is essential to avoid the pitfalls of carrying out two agendas separately. Green and digital transitions run in parallel, but linking them would allow us to take advantage of synergies and manage risk.

Excessive vulnerability

A key point highlighted by the Commission is thehigh vulnerability the EU and the effort needed to ensure the availability of critical raw materials needed for transitions: currently, the EU's dependence on third countries, including China, for a number of critical raw materials is even greater than that of Russia for fossil fuels. EU production represents only 4% of the global supply chain of critical raw materials used in the production of digital equipment, such as palladium, tantalum or neodymium.

Progress in the development of domestic fields, including those of strategic importance to the economy, has so far been insufficient, particularly as projects continue to encounter significant obstacles. The Commission highlights the projected increase in needs to meet clean energy targets: 3500% increase in lithium needed to produce batteries, 330% in cobalt use and a 30-35% increase in aluminum requirements and copper. And it is emphasized that the solution to reduce strategic dependencies and the criticalities of the need for critical raw materials passes through sufficient investments, greater circularity and precision in production.

Technological innovation

The geopolitics of technological innovation thus becomes more important in this context. There competition technological It can make innovation ecosystems and cybersecurity risks more fragmented, while growing concerns about the links between criminal cyber activities and disinformation, which threaten democracy, deepen divisions and hinder access to accurate information.

In the uncertainty of the global picture, it is clear that transitions involve profound changes in our way of life and lifestyles. This therefore requires the involvement and support of people, and can take place on condition that the economic system is adequate so that costs do not represent a problem for transitions and that the necessary financial resources are made available. 

Technological innovation is an economic opportunity, but it must be ensured preparation of the necessary workforce. The Jrc estimates that the green transition will lead to an increase of 884,000 new jobs by 2030. Balancing the effects with the digital transition that will create new jobs in advanced technologies but job losses in partially or fully automated sectors, the summary assessment of the strategic prediction is that overall, the labor market effects of the two transitions are potentially complementary, with amplification and cancellation effects that deserve further research.

The Jrc report identifies five economic sectors where the twin transition can be implemented by optimizing results: agriculture, buildings and constructions, energy, energy-intensive industries, transport and mobility. For each sector, the foreseeable stages in technological progress are indicated in three time bands: from now to 2030, in the decade 2030-2040, in the decade 2040-2050. Future research will need to ensure that several variable perspectives are considered. It is necessary to broaden and build a solid knowledge base to better connect digital and green transitions with the social dimension and to ensure that “no one is left behind”.

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