News
03 Sep 2025, 09:11
Julian Wettengel
|
EU

Finance “major stumbling block” for Europe’s move to climate neutrality – researchers

Clean Energy Wire

The EU risks falling behind in the global cleantech race unless it develops a long-term climate investment strategy to get back on track towards the goal of a net-zero emissions economy by mid-century, said a report from European Climate Neutrality Observatory (ECNO).

ECNO, a partnership of several research organisations, found that despite progress in some areas, the transition to climate neutrality is not happening fast enough – and is currently heading in the wrong direction regarding finance.

“Finance for the transition remains a major stumbling block and contributes to reduced progress in other areas,” said the report. A lack of sufficient financing had shown itself in a slow pace of building renovations, a decline in heat pump uptake, a slump in EV sales, and an insufficient expansion of wind power. The overall slow pace towards electrification also represented a crucial hurdle to ramping up manufacturing on cleantech such as renewables or batteries. A long-term investment strategy should introduce fiscal levers, de-risking mechanisms and regulation to boost private investment, said the report.

The researchers also warned that despite diversification in some areas – such as the move away from Russian energy supplies – dependencies remain or emerge for critical minerals or key technologies, with China the most prominent example. The country is also a dominant global competitor in cleantech manufacturing.

The European Union announced itself as a potential early climate champion in 2018 by pledging to reach climate-neutrality by 2050. Yet, rules and regulations are needed to bring emissions down sufficiently to make ‘climate neutrality’ a feasible reality. The EU has yet to agree large parts of an EU-wide climate architecture for the years following 2030. Current negotiations regarding a climate target for 2040 have run into difficulties, as some member states increasingly oppose ambitious policy.

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