Soapbox Snippets March 2025

  • Europe commits €100 bn to green manufacturing

  • China’s clean energy hits 10% of GDP

  • AI Summit unites leaders

  • US food standards face reform 

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Article Type
Sustainability Soapbox
Topics
Responsible Investing, Opinion
Published
March 21, 2025
Read time
5 mins
Author
Aegon AM Responsible Investment Specialists
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Clean Industrial Deal: Europe’s Initiative for Green Industrial Growth

 

The EU has launched its ‘Clean Industrial Deal’ (CID) to boost Europe’s clean manufacturing sector and turn decarbonisation into a driver of growth. Backed by over €100 billion in funding, the initiative strengthens EU industries amid high energy costs and fierce global competition.

 

Key measures focus on accelerating industrial decarbonisation while lowering energy costs to ensure European industry can thrive without compromising climate goals. Specific plans include:

 

  • A €500m pilot program will support long-term corporate Renewable Power Purchase Agreements. By providing EIB-backed guarantees for these contracts, the plan aims to stabilise the top line for renewable energy producers and create a more liquid PPA market.

  • Simplifying state aid rules and fast-tracking permits for clean energy and grid projects will further lower energy bills and accelerate renewable rollout.

  • An EIB package of at least €1.5bn backing manufacturers of power grid components. This investment will help modernise and expand Europe’s energy grids, a crucial step for integrating more renewable energy and improving energy security.

 

While the CID represents a major commitment, its success hinges on effective implementation. The broad scope of the plan, potential coordination gaps, and questions about timely funding distribution pose risks to execution. However, if implemented effectively, the CID could firmly position Europe as the leader in clean manufacturing and technology and be a big boost to European firms with exposures to renewables and gird modernisation.

 

Making America Healthy Again?

 

RFK Jr, the Head of the US’ newly created Department of Health & Human Services has made good on his commitment to “scrutinise the chemical additives in the [US] food supply.” In directing the Food and Drug Administration (FDA) to revise its safety rules and scrap the Generally Recognised As Safe (GRAS) mechanism, he hopes to eliminate food company’s ability to mark their own homework in determining their ingredients as “Generally Recognized As Safe” – circumventing the need for a formal FDA approval process.

 

The US has traditionally taken a more lenient approach to food safety compared to regions such as the EU, China, and the UK. The proposed policy shift would align the US with major markets and is expected to be well received by public health experts and medical organisations. However, the reception amongst the US’ major food corporations, which are already facing changes such as mandatory nutrition labelling requirements and restrictions to food dyes, is likely to be less positive. If RFK Jr’s reforms succeed, US food manufacturers may be compelled to reformulate their products on a large scale, benefiting ingredient suppliers in the process.

 

However, this is taking place in a context where DOGE-driven (Department of Government Efficiency) staffing cuts at the FDA and the US Department of Agriculture’s (USDA) Food Safety and Inspection Service are already putting pressures on resources at the organisation. The feasibility of RFKs proposals therefore, and the FDAs capacity to enact them are unclear. However, if they are enacted they will result in major costs for the US' food giant conglomerates.

 

AI Action Summit Sparks Global Collaboration

 

World leaders and tech executives convened in Paris for the AI Action Summit in February to discuss the future of artificial intelligence. The summit showcased the varying regulatory approaches of the US, China, and the EU. The US employs a fragmented strategy, combining the National AI Act at the federal level with executive orders and diverse state policies. In contrast, China is rapidly advancing its AI regulations, aiming to balance innovation with security and ethical standards. Meanwhile, the EU has adopted the AI Act, establishing harmonised rules across member states with an emphasis on trustworthy and human-centric AI.

 

Despite significant differences in global regulatory approaches, countries united on several initiatives at the AI Action Summit. A key outcome was the launch of Current AI, a $400 million initiative focused on developing open and ethically governed AI models. This initiative aims to expand access to valuable datasets in health, education, and media while ensuring privacy, potentially driving advancements in these sectors. The partnership has garnered support from various governments, philanthropic organisations, and tech industry leaders, emphasising the importance of inclusive and sustainable AI development.

 

French President Macron also proposed a global platform to incubate AI projects that serve the public good, aiming to counterbalance the dominance of private sector AI development and address concerns about power concentration in the hands of a few tech giants. Overall, the summit highlighted the delicate balance between innovation and regulation, which is crucial for AI's future trajectory.

 

Clean Energy's Role in China's GDP Growth

 

Analysis from the UK-based research organisation Carbon Brief and analysts at the Helsinki-based Centre for Research on Energy and Clean Air (CREA) found that in 2024, China invested 6.8 trillion yuan ($940 billion) in clean energy. Clean energy industries were defined as including electric vehicles and batteries, renewable manufacturing and power generation, railways, electric grids and storage, and energy efficiency products. To put that into perspective, it was close to the global investment figure in fossil fuels in 2024 ($1.12 trillion).

 

Overall, the contribution of clean energy to China's GDP grew to 10% in 2024, up from 9% in 2023. It grew three times faster than the Chinese economy. However, its contribution to China's economic growth fell to 26% of GDP last year, compared to 40% in 2023. This was due to deflation and plunging prices for renewable energy equipment such as solar and batteries – although lower prices helped boost the adoption of renewables, the report said.

 

Of the 6.8 trillion yuan, EV and hybrid production contributed 2.8 trillion yuan and 1.4 trillion yuan from factory investment. Charging infrastructure contributed an additional 122 billion yuan. Next was solar, at 2.8 trillion yuan. Of this, one trillion yuan was tied to investment in power generation projects. The manufacturing of solar projects contributed just shy of 800 billion yuan, with component exports comprising another 600 billion yuan and electricity generation shy of 400 billion yuan.

 

Notably, without the advancements in clean technologies, China would have fallen short of its 5% GDP growth target, achieving only 3.6% growth instead of the reported 5.0%.

 

According to the research, clean power investments are expected to continue rapidly through 2025, the last year of the current five-year plan. The government has stated that more ambitious targets for the next five-year plan are required to sustain current levels of clean energy deployment.

Disclosures
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Aegon AM Responsible Investment Specialists
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