EU risks losing energy transition race, Volvo and Vattenfall warn

BRUSSELS, May 23 (Reuters) – Europe risks being left behind on green energy innovation and investment if various pieces of legislation are not aligned and simplified, the CEOs of Volvo Group and Vattenfall said.

Sweden’s state-owned Vattenfall is a major producer of solar, wind and hydropower as well as nuclear and on Tuesday it agreed a 10-year wind power supply deal with Volvo.

Volvo CEO Martin Lundstedt told Reuters after an event in Brussels that Europe could lose the innovation race as a raft of new EU emissions targets and other renewable energy legislation do not align in terms of impact assessments.

Europe’s car industry group said on Tuesday that proposed Euro 7 emissions regulations will lead to direct costs that are up to 10 times higher than European Commission forecasts.

“We will deploy these technologies in both North America and Europe because you need to have regional value chains to make it happen,” Lundstedt said. “If we’re slow … the innovation power will happen where it happens first.”

Legislation produced at the EU level must be more coherent, Lundstedt said, pointing to the U.S. Inflation Reduction Act (IRA) that includes $369 billion of subsidies for electric vehicles and other clean technologies.

“What Europe should think about is the demand signal. We’re not building factories without demand…(The) investment clarity that IRA in its current construct is bringing is not only a clear signal to us but also to downstream customers,” he said.

“If that (U.S.) demand is exceeding the European demand we have to plan accordingly. That’s how markets work. Speed is everything.”

Volvo is manufacturing fleets of battery electric vehicle (BEV) trucks, but charging stations for heavy duty vehicles are non-existent on any usable scale in Europe. The truckmaker is also developing hydrogen powered fuel cells that are expected to hit the market in the latter half of the decade.

Vattenfall CEO Anna Borg said simplification was key.

“There is one thing the EU (European Union) can do and that is simplification. Today, it’s way too complicated in terms of legislation and permitting and that is slowing us down.”

“You need to make sure the prerequisites to be competitive are there … investments that are needed in electricity grids or other infrastructure is extremely important for this to happen,” she told Reuters.

Reporting by Julia Payne; Editing by Alexander Smith