Across Europe, demand for clean energy technologies is rising and Europe is not on track to hit its own targets in key sectors. The supply chains that underpin crucial technologies (such as critical materials, permanent magnets, batteries and wind power) are – or risk becoming – highly concentrated and exposed to geopolitical risk, threatening European economic and security interests as well as its energy transition and climate objectives.
Geopolitical fragmentation and great power rivalry
European governments are exposed to the economic and security implications of great power rivalry, fragmentation of the global economy and an increasingly transactional approach to relations between allies. China dominates critical supply chains and has demonstrated its willingness to use economic dependencies for geopolitical advantage, in particular its control over the processing of rare earths. The US is seeking to reshore industry through subsidies, tariffs and export controls and to leverage its security and economic dominance. Within this fragmenting geopolitical context, Europe’s strategy of generating industrial renewal and economic resilience through green growth is vulnerable on several fronts.
Governments are changing how they respond, but often lack a cohesive strategy
Without a systematic framework for managing trade-offs between competing objectives, industrial strategy interventions will not prove sustainable. European countries are developing and deploying a range of tools, including trade defence measures, industrial subsidies and strategies – most recently the EU’s Industrial Accelerator Act (IAA) – alongside national security measures including export controls and enhanced investment screening. However, these tools are not typically built on a national or European-level understanding of which supply chains should be prioritised and why. Given the fiscal pressures facing European governments, clear evidence of market failure and / or national security imperatives will be needed to justify sustained interventions.
Europe will also need to take a more systematic and targeted approach to the role of trade and investment with and in third countries to meet their energy and industrial policy objectives. The EU and European countries are increasingly pursuing international partnerships built around clean energy supply chains. Examples include the EU’s recent energy partnership with Egypt to accelerate renewable energy initiatives and the UK’s MoU with Chile to develop hydrogen and offshore wind. The US is pursuing similar objectives, demonstrated most recently by its Forum on Resource Geostrategic Engagement (FORGE).123 This is designed to support the diversification of critical minerals supply chains but may prioritise US rather than European interests. Europe’s ability to generate effective new supply chain partnerships will require a clearer assessment of acceptable and unacceptable dependencies, where and how Europe can remain competitive in clean technologies, and the role that supply chain partnerships can play in meeting Europe’s objectives.
The case for a new paradigm: Clean Technology Partnerships
The Clean Technology Partnerships Initiative (CTPI) was established by Catalyse Europe and IPPR to examine how Europe could build more resilient and investable clean technology supply chains by applying a systematic partnership approach. The project will analyse which supply chains are most important (on the basis of their impact across energy resilience, growth and national security lenses) and most vulnerable over the medium-term (given exposure to concentrated suppliers, fragile production capacity or geopolitical tensions). It will assess which producer countries have the capacity and interest in scaling supply through new partnerships. It will examine a range of practical approaches and mechanisms that such partnerships could adopt from foreign direct investment and joint ventures to offtake agreements. The final report, which will be published in early summer, will set out a practical operating model, priority sectors, suggested partnerships and possible transactions.
This work has been informed by discussions with a number of European governments and institutions. It draws on and synthesises extensive supply chain data sets and analysis from think tanks and research institutes, including Breugel, Carnegie, IEA, E3G, and Rhodium, as well as financial and corporate actors.
3. https://www.state.gov/releases/office-of-the-spokesperson/2026/02/2026-critical-minerals-ministerial
