Bridging the Gap: Turning Europe’s Climate Goals into Investment

As we approach the midpoint of the 2020s, the EU remains a global leader in climate ambition—but the gap between targets and tangible infrastructure delivery is growing. The IEA’s latest World Energy Investment 2025 report underscores a critical challenge: converting bold policy into bankable, investor-ready opportunities still requires meaningful reform. 

The EU is set to invest more than €330 billion ($390 billion) in energy infrastructure this year across renewables, grids, energy efficiency, and electrification. While this places the bloc behind only China and the United States, the EU’s share of global energy investment is shrinking. Increasingly, capital is flowing toward markets with clearer price signals, faster permitting, and stronger industrial policy alignment. 

This shift matters. As end-use electrification, data centre growth, and industrial decarbonisation drive demand for new infrastructure, Europe risks falling behind. Unlocking the required private capital will depend not just on climate targets, but on the EU’s ability to address longstanding structural barriers to project delivery and bankability. 

Permitting, Grids, and Scale 

Europe’s renewables sector remains active, but grid constraints are a growing bottleneck. The IEA notes that grid investment globally still lags behind generation, and in the EU, delays in permitting and grid connections continue to stall progress. GIIA members consistently point to these issues as key deterrents to investment, with unclear timelines and mounting risks limiting capital allocation. 

The European Commission’s 2023 Action Plan on Grids marked an important recognition of the challenge—but implementation timelines need sharpening. The 2025 European Grids Package offers a chance to address this, alongside full delivery of RED III reforms covering renewables, grids, storage, and flexibility assets. 

Meanwhile, the EU’s wind sector—once a global frontrunner—is losing ground. High turbine costs, supply chain challenges, and tougher auction conditions have led to project cancellations, including the high-profile Hornsea 4 offshore project in the UK. The IEA sees this as part of a broader trend of uncertainty dampening developer and investor confidence, particularly in offshore wind. 

Manufacturing and Strategic Autonomy 

Europe’s industrial competitiveness is also under pressure. Despite the Green Deal Industrial Plan and Net-Zero Industry Act, 2024 and early 2025 saw the EU struggle to attract and retain clean energy manufacturing. The IEA reports that U.S. solar module production tripled last year, while Chinese firms are expanding rapidly into new markets. Europe, by contrast, continues to face high costs and weaker incentives. 

Progress on the Net-Zero Industry Act is now vital. Without it, Europe risks missing the chance to scale its own supply chains, exposing the region to price and geopolitical risk. 

Strategic autonomy remains a sound long-term goal. Clean energy equipment prices have fallen 60% globally since 2014—but that price advantage comes with trade-offs, from critical mineral access to supply chain resilience. For infrastructure investors, price certainty matters—but so does long-term reliability. 

Time for Realignment 

Europe still holds major advantages: strong legal and regulatory frameworks, deep pools of capital, and an established track record on climate leadership. But to turn those strengths into delivered infrastructure, action is needed on three fronts: 

• Reforming grid investment and planning models 
• Accelerating permitting and delivery frameworks 
• Boosting industrial competitiveness in clean energy technologies 

The World Energy Investment 2025 report is a clear signal. Climate ambition alone is not enough. What matters now is creating consistent, investible policy frameworks that align infrastructure delivery with long-term targets. 

For GIIA members and the wider investor community, the opportunity is still there. But seizing it will require the EU to move from ambition to action—without delay.