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Neighborhood Drivers, And Entrepreneurial Synergies

As Brussels launches its €1.8 trillion stimulus plan, European entrepreneurs must not overlook business opportunities in their neighborhood, to fully tap into Europe’s financial firepower.

Photo: Since April, the Horizon Europe programme, amounting €95.5 billion have begun being rolled out.  / Credits © Brett Sayles provenant de Pexels

What’s driving the day in Europe’s neighborhood

Europe’s Green New Deal, if implemented, will have global repercussions: 55% lower emissions by 2030, compared to its 1990 levels and carbon neutrality by 2050 (Bruegel and European Council on Foreign Relations).

To put these objectives in context, using 2015 as a reference year, coal imports must drop by 71-77% by 2030, oil by 23-25% and natural gas by 13-19%. By 2050, the latter two are expected to drop by 80% and 70% respectively.

Given the Union’s consumption levels and external actors depending on our energy voracity, the transition will unavoidably reverberate in Europe’s periphery and the world at large (Figure 1).

Figure 1: EU Energy Consumption & Fossils Fuel Exports to EU (% of total)

For Algeria, hydrocarbons are the backbone of its economy which account for roughly 30% of GDP, 60% of budget revenues, and nearly 95% of exports. Libya’s war-torn economy depends almost entirely on oil and gas exports to stay economically afloat and avoid a total meltdown. Egypt has long been reliant on hydrocarbons to keep its commodities’ exports afloat. Tunisia as well retains petroleum as one of its core industries.

These markets’ enterprises will have to adapt to retain the access they enjoy today, or more, in Europe.

Especially, many of these players lack the sufficient in-house capabilities, prompting the Commission and the European Investment Bank to work together, thus coupling domestic and external action policies.

What it means for entrepreneurs

The Union’s financial efforts, with a firepower totaling nearly €1.8 trillion for 2021-2027, will be part of the EU’ flagship Green Deal, as 35% of these funds are earmarked for climate objectives.

Since April, the Horizon Europe programme, amounting €95.5 billion – of which €5 billion earmarked for the new COVID stimulus fund – have begun being rolled out. This is a 30% increase over its predecessor, making it the most ambitious R&I programme globally (Luxinnovation).

In particular, players in the energy, healthcare, and infrastructure/construction industries ought to smile right now. Healthcare, as quelling a pandemic will require a global effort. Instead the first and last are intrinsic to a proper green transition, as they contribute roughly 70% to global greenhouse gas emissions (WorldBank).

This geopolitical reality will have implications for entrepreneurs seeking EU funding to achieve growth and penetrate new markets. This particularly holds true when enterprises go at it together, and not individually.

Often overlooked when planning a project’s structure, and consequent consortia members, are neighborhood players, which can be a crucial component in a proposal’s success, or failure, as Brussels is keen to gravitate these economies within its sphere of influence.

Opportunities to harvest synergies will arise, for example, in know-how and skills in human capital. Many neighboring countries lack the abilities to meet the EU’s energy green targets domestically, implying a higher expectation of collaborations cross-country for consortia applicants by Brussels.

Nevertheless, mobilization of funds can fully be done only once all national plans have been scored by the Commission, as they will determine their roll-call number, and once member states have fully ratified the relevant laws to empower Europe.

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