Companies Need to Double Low-Carbon Spending to Reach EU Goal

(Bloomberg) -- Companies in the European Union need to increase their expenditures and their ambitions if they're to reach the bloc's target of net-zero emissions by 2050.

While businesses reported 124 billion euros ($134 billion) of capital investments and research and development spending in low carbon technologies and infrastructure during 2019, they will need to double their capital expenditures to meet the E.U.'s goal, according to a report from climate disclosure group CDP and consulting firm Oliver Wyman.

Europe is on course to become the world's first climate-neutral continent, meaning it will reduce greenhouse gas emissions to the point where it makes no net contribution to rising global temperatures, and plans to enshrine the 2050 goal in European law and make it irreversible. And with policy makers zeroing in on carbon emissions, business in all industries, especially in extractive ones, are facing growing pressure to enact their own plans for reducing their impact on the planet.

“We need more vision, more ambition and more investment,” said Steven Tebbe, managing director of CDP Europe. “Turning a business model around is very risky and disruptive and so there is a resistance to throw the current business model overboard and completely change direction. Companies would rather go iteratively and have a slower evolution.”

CDP and Oliver Wyman analyzed 882 public traded companies that have annual emissions equivalent to three quarters of the EU total and represent approximately 76% of the region's total market capitalization.

The report found the biggest areas of new investment were in research and development for electric vehicle technologies, with 43 billion euros, as well as capital investments in renewable energy, which drew 16 billion euros, and energy grid infrastructure projects, which saw 15 billion euros invested.

The business case for making new low carbon investments is compelling, according to the report. European companies expect to avoid 2.4 gigatons of emissions – more than the annual emissions of the U.K., Germany, France, Italy and Poland combined – while contributing more than 40 billion euros to their bottom lines.

European companies identified 1.22 trillion euros in new low carbon business opportunities, such as through higher demand for electric vehicles and green infrastructure, which compares with an investment cost of 192 billion euros.

To contact Bloomberg News staff for this story: Alastair Marsh in London at amarsh25@bloomberg.net

To contact the editor responsible for this story: Tim Quinson at tquinson@bloomberg.net

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