COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL 2021 Strategic Foresight Report The EU’s capacity and freedom to act
Date: 2021-09-08
Institutions: European Commission, Secretariat-General
Subjects: EU growth strategy, adaptation to climate change, democracy, digital technology, digitisation, economic growth, international security, reduction of gas emissions, sustainable development, the EU's international role

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 8.9.2021  COM(2021) 750 final  COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL 2021 Strategic Foresight Report           The EU’s capacity and freedom to act  
 
 
I. 

INTRODUCTION 

The  European  Union  is  charting  a  strategic  path  to  becoming  the  first  climate-neutral 
continent  by  2050,  grasping  the  opportunities  of  the  digital  age,  building  an  economy  that 
works  for  people,  promoting  the  European  way  of  life,  strengthening  our  unique  brand  of 
responsible global leadership, and nurturing, protecting and strengthening our democracy.  

Openness,  as  well  as  rules-based  international  and  multilateral  cooperation,  are 
strategic  choices.  They  stimulate  prosperity,  fairness,  stability,  competitiveness  and 
dynamism  within  the  EU  and  beyond.  The  history  of  the  European  project  demonstrates 
the  benefits  of  well-managed  interdependence  and  open  strategic  autonomy  based  on 
shared  values,  cohesion,  strong  multilateral  governance  and  rules-based  cooperation.  The 
pandemic  has  only  strengthened  the  case  for  international  cooperation  to  address  global 
challenges.  

This 2021 Strategic Foresight Report presents a forward-looking and multi-disciplinary 
perspective on the EU’s capacity and freedom to act in the coming decades. Based on an 
expert-led,  cross-sectoral  foresight  process1,  it  presents  global  trends,  uncertainties  and 
choices  that will shape  Europe’s future. The report provides the context  for possible policy 
responses. It builds on the 2020 Strategic Foresight Report2, which introduced resilience as a 
new compass for EU policymaking. 

Section  II  identifies  important  structural  global  trends  towards  2050  that  will  affect  the 
EU’s  capacity  and  freedom  to  act:  climate  change  and  other  environmental  challenges; 
digital  hyperconnectivity  and  technological  transformations;  pressure  on  democracy  and 
values; shifts in the global order and demography. Section III sets out ten areas in which the 
EU  could  strengthen  its  open  strategic  autonomy  and  global  leadership.  The  report 
stresses that the EU’s future capacity and freedom to act will  depend on whether the EU is 
able to make ambitious choices today, guided by its values and interests, across the identified 
policy areas.  

II.  KEY GLOBAL TRENDS 

1.  CLIMATE CHANGE AND  OTHER ENVIRONMENTAL CHALLENGES 

Climate  change  has  already  impacted  every  region  on  Earth  in  unprecedented  and 
irreversible ways3. On the current trajectory, global warming will likely surpass 1.5℃ in the 
next two decades and head towards 2℃ by 20504. The first single year of global temperature 
at this level could already occur in the next five years. Every additional 0.5℃ will increase 
the  intensity  and  frequency  of  extreme  weather  events,  droughts,  wildfires  or  floods, 

1   The  Communication  builds  on  the  Joint  Research  Centre  (JRC)’s  ‘science  for  policy’  report:  JRC  (2021), 
Shaping & securing the EU’s Open Strategic Autonomy by 2040 and beyond. The foresight process included 
consultations  with  Member  States  and  discussions  with  partners  in  the  European  Strategy  and  Policy 
Analysis System, a literature review, Delphi survey (involving Commission services, the European External 
Action  Service  and  relevant  stakeholders  from  academia,  industry,  civil  society,  public  administration  and 
international institutions) and scenario building. In addition, the ongoing work on the  resilience dashboards, 
as well as other foresight activities helped inform the analysis of the EU’s open strategic autonomy. 

2   2020 Strategic Foresight Report: Charting the course towards a more resilient Europe (COM(2020) 493). 
3   IPCC  (2021),  Climate  change  2021:  The  Physical  Science Basis.  Contribution  of  Working  Group  I  to  the 

Sixth Assessment Report of the Intergovernmental Panel on Climate Change.  

4   World Meteorological Organization (2021), WMO global annual to decadal climate update. 

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including in locations where this was uncommon in the past. Rising temperatures also mean 
more ice melting and higher sea levels. These changes will have significant consequences for 
the environment, health, food and water security, and human safety and development. Over 
the past  decade, weather-related events  have triggered an estimated displacement of around 
23 million  people on average  each  year, and the migration pressures will only increase.  By 
2050,  over  200  million  people  could  need  humanitarian  assistance  every  year  partly  due  to 
climate-related disasters5.  

Pressure  on  water  and  food  security  will  continue  to  grow.  Parts  of  Europe  are  already 
under  medium-to-high  water  stress  levels  (Figure  1),  and  this  is  set  to  increase  over  time. 
Water  scarcity  will  become  particularly  problematic  in  the  southern  EU  neighbourhood, 
potentially aggravating conflicts and pressure on migration. This issue can also affect the EU 
indirectly,  through  food  insecurity  and  price  shocks.  Over  40%  of  the  EU’s  agricultural 
imports could become highly vulnerable to drought by 20506, inducing competition for water 
and fertile land. Overall, the impact of droughts on EU’s economy could reach over EUR 65 
billion a year by 21007. The agricultural activity zones will not move northwards, given that 
higher average temperatures in Northern Europe will be accompanied by the risk of increased 
cold waves caused by a weakened Gulf Stream.  

Figure 1: Water stress, conflicts and migration8 

5   International Committee of Red Cross and Red Crescent Societies (2019), The Cost of Doing Nothing. 
6   Ercin,  E.,  Veldkamp,  T.I.E.  &  Hunink,  J.  (2021),  Cross-border  climate  vulnerabilities  of  the  European 

Union to drought (Nat Commun 12, 3322).  

7   Naumann,  G.,  Cammalleri,  C.,  Mentaschi,  L.  et  al.  Increased  economic  drought  impacts  in  Europe  with 

anthropogenic warming. Nat. Clim. Chang. 11, 485–491 (2021). 

8   European  Commission  (2021);  *This  indicator  shows  how  much  freshwater  is  withdrawn  by  economic 
activities,  compared  to  the  total  renewable  freshwater  resources  available.  **Armed  Conflict  Location  & 
Event  Data  Project,  event  types  included:  battles,  explosions/remote  violence,  violence  against  civilians. 
Source data: JRC, GADM, IOM, ACLED. 

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Environmental  challenges  extend  well  beyond  climate  change,  with  a  particularly 
alarming  situation  regarding  biodiversity  loss  and  change  in  the  nitrogen  cycle.  The 
EU’s natural  ecosystems are under  cumulative pressures not only  from climate change, but 
also from pollution, land use, resource extraction, invasive species and the loss of pollinators. 
Moreover, human activities have substantially changed the nitrogen cycle, mainly due to its 
agricultural  use.  The  scale  of  this  change  is  far  greater  than  the  modification  of  the  carbon 
cycle  resulting  from  greenhouse  gas  emissions9.  This  affects  freshwater,  coastal  areas  and 
human  health.  Such  environmental  challenges  have  economic  consequences  often 
overlooked: an estimated EUR 3.5-18.5 trillion per year in ecosystem services from 1997 to 
2011 were lost globally owing to land-cover change, and an estimated loss of EUR 5.5-10.5 
trillion per year due to land degradation10.  

There  is  an  important  interlinkage  between  climate  change,  biodiversity  loss, 
environmental  degradation  and  public  health.  Loss  of  biodiversity,  pressure  on  animal 
habitats,  the  excessive  use  of  antibiotics,  risks  relating  to  biological  research  of  highly 
pathogenic  microbes,  unhealthy  lifestyles  –  all  these  factors  make  future  pandemics  or 
diseases  more  likely.  The  results  will  affect  humans,  major  food  crops  and  animal  health. 
Challenges 
resistance,  non-
communicable  diseases  (cancer,  diabetes  or  obesity),  and  mental  health  problems.  In 
addition,  with  climate  change  certain  diseases  (malaria  or  dengue)  will  become  more 
prevalent further north11.  

infectious  diseases,  advanced  antimicrobial 

include 

2.  DIGITAL HYPERCONNECTIVITY AND TECHNOLOGICAL TRANSFORMATIONS 

To  be  technologically  and  digitally  sovereign,  the  EU  will  need  to  support  the 
development  and  uptake  of  human-centred  knowledge  and  technologies.  The  EU  is  a 
strong  player  in  terms  of  knowledge  and  innovation:  it  accounts  for  almost  20%  of  the 
world’s  total  research  and  development,  publications  and  patenting  activity12.  However,  it 
lags behind global competitors in private investment into research and other indicators. The 
EU has a performance gap with Australia, Canada, Japan, South Korea and the United States. 
Since  2014,  its  position  improved  to  Australia,  Canada,  Brazil,  India,  Russia  and  South 
Africa but worsened to Japan, South Korea, the USA and China.  

Despite the uncertainty accompanying emerging technologies, it is clear that a number 
of breakthrough innovations can be key for the twin transitions and competitiveness13. 
The EU is a technological champion in advanced manufacturing and materials, with its firms 
delivering many critical enablers to global production lines. It is a leader in future smart and 
sustainable  mobility  and  low-carbon  technologies.  The  EU’s  capabilities  in  artificial 
intelligence, big data and robotics are similar to Japan’s, but it needs to catch up with leaders: 
the USA and China. In key quantum technologies, the USA, Japan and China are currently in 

9   European Environment Agency (2019), The European environment - state and outlook 2020.  
10   COM(2021) 380. 
11   Kyle  J.  Foreman  et  al.  (2018),  Forecasting  life  expectancy,  years  of  life  and  all-cause  and  cause-specific 
formality for 250 causes of death: reference and alternative scenarios for 2016-2040 for 195 countries and 
territories (The Lancet). 

12   The  EU  is  responsible  for  the  biggest  share  of  worldwide  patent  applications  in  advanced  manufacturing 
technologies and the Internet of Things for mobility.  European Commission (2020),  Science, research and 
innovation performance of the EU 2020. 

13   SWD(2021) 352. 

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the  lead14.  By  2025,  the  EU  will  have  its  first  computer  with  quantum  acceleration  and  if 
matched with investment, it could be at the cutting edge of quantum capabilities by 203015.  

Other  promising  technologies  include  microelectronics,  new  materials  for  bio-degradable 
electronics,  flexible  and  printed  electronics,  and  2D  material  based  technologies  such  as 
graphene.  Moreover,  many  pilot  technologies  have  high  decarbonisation  potential.  These 
include clean hydrogen, low carbon fuels, carbon capture and storage/usage, next-generation 
sustainable  batteries,  bio-based  technologies  and  materials,  methane16  cracking,  high 
temperature  superconductivity,  advanced  geothermal  and  ocean  energy,  high  altitude  wind 
energy  generation,  and  advanced  fusion-based  nuclear  reactors17.  Various  nature-based 
solutions, like large-scale reforestation, also have major potential in this context.  

Beyond specific technologies, hyperconnectivity is driving the transformation. It results 
in  an increased convergence of industries, products,  technologies and services. The number 
of connected devices globally might increase from 30.4 billion in 2020 to 200 billion in 2030. 
Increased  connectivity  of  objects,  places  and  people  will  result  in  new  products,  services, 
business models, life and work patterns. At the same time, it results in the increased risk of 
cyber-attacks  and  network  outages,  in  both  digital  and  physical  world,  e.g.  essential 
infrastructures  like  pipelines  and  hospitals.  It  might  also  increase  the  threat  of  intellectual 
property and data loss and theft. Hyperconnectivity has only accelerated with the pandemic 
and its social impact needs to be carefully monitored. 

However,  new  technologies  and  hyperconnectivity  do  not  come  without  challenges. 
Certain  jobs  will  be  lost  with  automation18.  Just  in  the  EU  in  2018,  about  14%  of  adult 
workers were found to face a very high risks of automation19. In the future, 50% of current 
jobs  globally  could  be  automated20,  with  significant  differences  across  countries  and 
sectors21. New jobs will appear, but will require new skills. If left unaddressed, these trends 
might  lead  to  the  erosion  of  fundamental  social  rights,  and  increased  inequalities  and 
dependencies  within  and  between  states.  Moreover,  digital  transition  can  increase  e-waste, 
and drive demands for energy or use of rare resources22.  

3.  PRESSURE ON DEMOCRATIC MODELS OF GOVERNANCE AND VALUES  

The EU is the largest group of democracies in the world, but democratic governance is 
declining  globally.  2020  was  the  15th  consecutive  year  of  a  decline  in  political  rights  and 
civil liberties at a global level23, exacerbated by the coronavirus pandemic in many regions. 
34% of the world’s population  lives in  countries where democratic  governance is  declining 

14   The  USA  is  investing  more  than  EUR  1  billion  in  the  period  2019-2028  and  China  is  building  a  EUR  9 
billion National Laboratory for Quantum Information Sciences. JRC (2021), Shaping and securing the EU’s 
Open Strategic autonomy by 2040 and beyond.  

15   COM(2021) 118. 
16   A greenhouse gas with greenhouse effect 25 times of that of carbon dioxide.  
17   World  Economic  Forum  (2015),  Scaling  technologies  to  decarbonise  energy.  Fusion-based  nuclear  energy 
generation can help solve the problem of radioactive waste resulting from fission-based nuclear energy. 

18   World Economic Forum (2020), The future of jobs report 2020. 
19   Pouliakas K. (2018), Determinants of automation risks in the labour market, a skills-needs approach, IZA 

Institute of Labour Economics.  
20   Source: European Commission. 
21   OECD (2021), What happened to jobs at risk of automation, policy brief on the future of work.  
22   European Parliament, E-waste in the EU: facts and figures (infographic).  
23   Freedom House, Freedom in the World 2021.  

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and  only  4%  lives  in  countries  that  are  becoming  more  democratic24.  Geopolitical 
contestation25, inter-state polarisation and tensions are likely to persist in the coming decades. 
If the ongoing erosion of democratic governance continues, it will affect both established and 
emerging  democracies.  The  long-term  performance  of  democratic  systems  hinges  on  their 
capacities to adapt to new realities and to remain resilient to internal and external challenges.  

Zones  of  instability  and  conflict  close  to  the  EU  and  beyond  are  likely  to  persist  and 
may  even  grow.  Both  state  and  non-state  actors  are  likely  to  strengthen  their  hybrid  tools, 
including  the  use  of  disruptive  technologies,  spread  of  disinformation  and  misinformation, 
information operations and both military and non-military influence. Repression of freedoms 
and democratic reforms, as well as continued instability in countries and regions in near and 
further  EU  neighbourhood,  like  Afghanistan  or  Syria,  will  continue  to  have  an  impact  on 
migratory pressure. 

Large-scale  disinformation,  powered  by  new  tools  and  online  platforms,  will  pose 
increasing  challenges  to  democratic  systems  and  drive  a  new  type  of  information 
warfare. Countries, organised crime groups, businesses or individuals use these solutions to 
spread  disinformation  globally  or  gain  competitive  advantages.  This  could  threaten  our 
democracies, polarise debates, and put health, security and the environment at risk. 

4.  SHIFTS IN THE GLOBAL ORDER AND DEMOGRAPHY 

The world’s population will reach 8.5 billion in 2030 and 9.7 billion in 2050. Population 
growth will be uneven. It will stagnate in many advanced economies. The EU’s population is 
expected to fall to just over 420 million, a 4.3% share of the global population. In Asia, the 
2040s could represent an inflection point, after which populations are expected first to level 
out  and  then  begin  decreasing  around  mid-century,  with  East  Asia  experiencing  rapid 
demographic  decline26.  Africa’s  population  is  projected  to  expand  from  1.2  billion  to  1.8 
billion between 2017 and 2035 – when about half of the population would be under the age of 
21. In 2050, India, China, Nigeria, the USA and Pakistan will be the most populated countries 
(Figure  2).  Demographic  growth  will  influence  geopolitical  ambitions,  but  may  also  create 
sustainability or migration challenges. By 2050, the working age population will diminish by 
about 16% in Europe and 17% in China, while it will grow in North America and India27. The 
projected median age of the EU population will rise from 43.9 in 2020 to 48.2 years by 2050. 
Sharp  rises  in  total-age  dependency  ratios28  are  projected  for  many  EU  areas.  If  this  trend 
continues,  by  2050  there  may  be  135  dependent  non-workers  for  every  100  workers  in  the 
EU29. 

24   Alizada N., Cole R., Gastaldi L., Grahn S., Hellmeier S., Kolvani P., Lachapelle J., Lührmann A., Maerz S. 
F.,  Pillai  S.,  Lindberg  S.  I..  2021.  Autocratization  Turns  Viral.  Democracy  Report  2021.  University  of 
Gothenburg: V-Dem Institute. 

25   See, for instance, Sharon Lecocq (2020), EU foreign policy and hybrid actors in the Middle East: ready for 

geopolitical contestation?, Global Affairs, 6:4-5, 363-380, DOI: 10.1080/23340460.2021.1872401. 

26   UN (2019), World population prospects. 
27   JRC (2021), Shaping & securing the EU’s Open Strategic Autonomy by 2040 and beyond.  
28  The  total  age  dependency  ratio  relates  the  number  of  individuals  who  are  likely  to  be  dependent  on  the 
support of others for their daily living – the young and the elderly – to the number of those individuals who 
are capable of providing this support (Eurostat).  

29   JRC (2019), Demographic scenarios for the EU: migration, population and education. 

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Figure 2: Projected shares of global population30 

The  coming  decades  will  be  marked  by  an  increasing  redistribution  of  global  power, 
with  its  geo-economic  centre  of  gravity  shifting  eastwards31.  The  G7  countries  (Canada, 
France,  Germany,  Italy,  Japan,  the  United  Kingdom,  the  USA)  currently  represent  around 
40% of global GDP, down from over 60% in 197532. The economic weight of the ‘emerging 
7’ (Brazil China, India, Indonesia, Mexico, Russia, Turkey) equates around two-thirds of the 
G7’s.  This  ratio  will  reverse  in  the  period  to  2050.  China  is  set  to  become  the  biggest 
economy before the end of this decade, with India possibly surpassing the EU in the next 20 
years (Figure 3). At the same time, GDP growth in emerging and developing countries does 
not necessarily translate into a better quality of life for their citizens, including for countries 
with high GDP per capita33. Increased inequalities, lower environmental and labour standards 
remain key challenges for emerging economies. 

Global  rivalry  and  fragility  are  likely  to  increase.  The  USA-China  competition  could 
become  a  defining  feature  of  the  geopolitical  landscape.  The  energy  transition  will  further 
contribute  to  the  redistribution  of  power.  Fossil  fuel  exporters  with  the  least  diversified 
economies and/or the weakest institutions stand to be the most  affected. On the other hand, 
countries with a large capacity to generate and export renewable energy will gain influence. 
The  EU  can  expect  continued  tensions  and  adverse  competition  (including  from  China  and 
Russia),  requiring  robust  policies  to  project  stability  and  prosperity,  particularly  in  its 
neighbourhood. New tensions could arise from competition in contested areas, such as space 
or the Arctic. Increasing threats from organised crime, corruption, extremism, terrorism, and 
hybrid  threats,  including  the  instrumentalisation  of  migration  for  political  purposes,  could 
increasingly threaten EU security.  

30   UN (2019), World population prospects. 
31   This is already felt in international organisations, with emerging economies increasingly shaping policy. 
32   The EU is also a ‘non-enumerated’ member of G7. As it participates in this cooperation as a supranational 

organisation, it is not taken into account in this comparison. 

33   The  Human  Development  Index  was  created  to  emphasize  that  people  and  their  capabilities  should  be  the 

ultimate criteria for assessing the development of a country, not economic growth alone. 

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Figure 3: Projected shares of global GDP34 

Multi-dimensional  competition  and  deep  interdependences  are  likely  to  be  defining 
features of an increasingly multipolar global order. Global governance and infrastructure 
is at risk of fragmentation due to intensified rivalries in a range of areas. More diverse and 
assertive actors with increasing capacities and aspirations are likely to appear. This includes 
non- and intra-state actors, as well as transnational movements. While no single player will 
be  in  a  position  to  dominate  all  regions  and  policy  domains35,  strategic  dependencies  and 
capacities will continue emerging and evolving. 

III.  FACING  CHALLENGES  AND  SEIZING  OPPORTUNITIES  FOR  THE  EU’S 

GLOBAL LEADERSHIP 

1.  ENSURING SUSTAINABLE AND RESILIENT HEALTH AND FOOD SYSTEMS  

The  EU’s  healthcare  systems  are  among  the  most  advanced  in  the  world36,  but  their 
sustainability and resilience need to increase. This includes investments in innovative care 
models (e.g. integrated care, telemedicine), strengthening the healthcare workforce, focusing 
on  preventive  measures  and  addressing  comorbidity.  To  ensure  healthier  ageing,  healthier 
lifestyles and physical activity will have to be combined with smart alternatives to long-term 
care,  such  as  remote  medicine  solutions  and  home-based  care  robotics.  New  technologies 
matched with social and health policies might mitigate the additional costs associated with an 
ageing  population,  while  enabling  older  people  and  persons  with  disabilities  to  live  more 

34   The figures correspond to shares of nominal GDP, measured in current US dollars. They are obtained from 
the OECD’s latest long-term projections (Economic Outlook 103, July 2018). With PPP adjustment, the rise 
of  China  and  India  is  faster.  China’s  adjusted  GDP  is  already  higher  than  that  of  the  USA  or  the  EU  and 
India  will  overtake  them  by  2040.  This  is  due  to  the  fact  that  economic  convergence  tends  to  imply  an 
increase  of  local  prices  (of  services,  for  example),  so  PPP  adjustment  increases  the  GDP  of  emerging 
economies relative to developed economies. Real GDP comparisons among these four examples are similar 
to the ones based on nominal GDP.  

35   US  National  Intelligence  Council  (2021),  Global  trends  2040.  Published  every  four  years  since  1997,  the 
report assesses the key trends and uncertainties that will shape the USA’s strategic environment in the next 
20 years. The European Policy and Analysis System was consulted in the preparation of the latest edition. 

36   European Commission (2020), Report on the impact of demographic change. 

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autonomously.  Online  interaction,  monitoring,  and  appropriate  patient  self-care  could 
generate  annual  savings  of  up  to  EUR  120  billion  in  public  healthcare  spending  across  the 
EU37.  A  common  European  data  space  for  health  could  support  the  rapid  development  and 
deployment  of  personalised  medicine  through  data-driven  decisions,  thereby  improving  the 
effectiveness and accessibility of healthcare.  

Early  in  the  pandemic,  the  EU’s  strategic  dependencies  on  third  countries  for  critical 
goods,  like  pharmaceutics,  have  become  obvious.  Of  5200  imported  products,  the  EU  is 
highly  import-dependent  in  relation  to  137  in  ‘sensitive  ecosystems’38,  with  14  products 
belonging  to  the  health  ecosystem.  An  important  part  of  the  active  ingredients  used  for 
generic medicines comes from India and China, as well as the majority of raw materials and 
intermediates  used  in  pharmaceutics.  Both  countries  are  bolstering  their  environmental  and 
safety  measures  for  the  chemical  sector,  and  China  is  closing  some  manufacturing  plants. 
This  could  have  implications  for  the  availability  and  pricing  of  medicines39.  While  the  EU 
has strong capabilities to produce innovative medicines, it needs to ensure supply security for 
critical  off  patent  products  with  particularly  consolidated  supply  chains  through  alternative 
sources. However, pharmaceutical supply chains are highly complex and require the highest 
quality. They are therefore particularly vulnerable to supply disruptions. In case of a public 
health crisis or supply disruptions, it is not possible to establish alternative manufacturers of 
certain key components in the short term. Yet, the availability of certain products at all times 
is  key  for  public  health40.  Establishing  or  re-establishing  the  production  of  some  critical 
medicines  and  medical  countermeasures  in  the  EU  might  be  supported  by  innovation  in 
manufacturing processes to compensate for possibly higher production costs in the EU and to 
strengthen leadership in green and digital pharmaceutical manufacturing. 

A  European  Health  Union  would  strengthen  EU’s  ability  to  tackle  new  health  crises. 
The  pandemic  has  shown  the  need  for  a  full  review  of  EU  structures  and  mechanisms 
relevant for the prevention and response to cross-border health threats. A stronger European 
Health Union could reinforce the collective preparedness of the EU against health threats as 
well as enhance coordination in times of crisis. The EU Health Emergency Preparedness and 
Response Authority (HERA) will help anticipate cross-border threats to health and underpin 
preparedness and response by focusing on anticipatory threat assessments, foresight, market 
intelligence and horizon scanning of emerging pathogens and technologies. This knowledge 
will also help HERA steer the development of an annual State of Preparedness report. On a 
global scale, it remains important to reinforce the international preparedness and response to 
future pandemics, notably by reforming the World Health Organization and strengthening its 
capacity to address health emergencies. This also includes working towards an international 

37   COM(2021) 118. 
38   SWD(2021)  352.  The  updated  New  Industrial  Strategy  identifies  a  number  of  areas  where  the  EU’s 
dependence on a limited number of suppliers is most prominent, which are defined as ‘sensitive ecosystems’ 
(e.g.  aerospace  and  defence,  electronics,  health  etc.).  The  SWD  announced  a  second  stage  of  review  of 
potential dependencies and periodic monitoring of the EU’s current and future dependencies. 

39   European Commission (2020), Foresight ON health newsletter.  
40   For example, the EU’s heavy dependency on plasma from the USA, in particular where no other suppliers 
are available, undermines its health capacities and ability to react in the event of new public health crises. 

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treaty  on  pandemics41  and  boosting  local  manufacturing  capacities.  Multilateralism  is  the 
only way to prevent the reoccurrence of similar crises in the future. 

While  the  EU’s  food  systems  are  increasingly  challenged,  new  technologies  could 
strengthen their sustainability and resilience. During the pandemic, EU action to facilitate 
the  movement  of  food  across  the  single  market  and  keeping  global  trade  open  was  crucial. 
However, climate change and nature degradation may distort supply, demand and trade in the 
major food-producing regions, including the EU, inducing price variability and spikes42 that 
could have serious socio-economic impacts. Changes in demand and diets will also have an 
influence.  For  example,  advances  in  nutrigenomics  (which  connects  the  human  genome  to 
nutrition  and  health)  will  lead  to  more  personalised  diets  and  new  health  needs43.  The 
adoption of a legislative framework for sustainable food systems will accelerate and facilitate 
the transition and increase the food sustainability. Disruptive innovations, such as insect- and 
algae-based  food,  cellular  agriculture,  or  indoor  farming44,  could  lower  the  ecological 
footprint of food production. Biotechnology, including new genomic techniques, could play a 
key  role  in  developing  innovative  and  sustainable  ways  to  protect  harvests  from  pests, 
diseases  and  the  climate  change  effects.  A  coherent  and  sustainable  approach  to  the  whole 
food system, from food production to reducing food waste will be crucial. 

2.  SECURING DECARBONISED AND AFFORDABLE ENERGY 

Securing a sufficient supply of decarbonised and affordable energy is key on the path to 
a greener and more digital Europe.  Implementing the EU’s green objectives would mean 
that  by  2050  more  than  80%  of  gross  inland  energy  consumption  would  come  from  low-
carbon sources, mostly from renewables, while fossil fuel for energy purposes would drop to 
less  than  10%45.  Reducing  the  EU’s  fossil  fuel  dependency  requires  increasing  the  use  of 
renewable energy and rapidly diversifying the EU’s energy supply. It also entails developing 
energy 
low-carbon  and  environment-friendly 
technologies and solutions in the EU and with key third country partners. Lastly, it calls for 
preventing  carbon  leakage.  Greater  energy  efficiency  will  be  crucial  to  avoiding  possible 
rebound effect as renewable energy becomes cheaper and humanity consumes more of it. To 
meet the Paris Agreement and European Green Deal targets, energy intensity in the EU will 
need to fall steeply, to about half of today’s levels46, by 2050.  

infrastructure,  smart  grids,  and  new 

Reaching the climate neutrality objective by 2050 could help the EU to reduce its energy 
dependency  from  around  60%  today  to  15%47.  This  should  be  supported  by  significant 
progress  on  the  circular  economy.  A  deeper  energy  union  will  support  decarbonisation, 
improve  energy  efficiency,  strengthen  the  internal  energy  market  and  increase  security  of 
supply.  Transition  pathways  and  a  strong  agenda  for  sustainable  and  low-carbon 

41   The EU and a group of countries from all WHO regions have built a coalition ahead of the 74th session of 
the World Health Assembly in May 2021 to establish a process towards a WHO convention, agreement or 
other international instrument on Pandemic Preparedness and Response.  

42   European  Commission  (2021),  Foresight  ON  synergies  between  civil,  defence  and  space  industries 

newsletter.  

43   Fraunhofer  Institute  for  Systems  and  Innovation  Research  (2019),  50  trends  influencing  Europe’s  food 

sector by 2035.  

44   European Commission (2020), Foresight On health newsletter.  
45   Stepping  up  Europe’s  2030  climate  ambition  Investing  in  a  climate-neutral  future  for  the  benefit  of  our 

people, SWD(2020)176. 

46   International Renewable Energy Agency (2018), Global energy transformation: a roadmap to 2050. 
47   Source: Eurostat. 

9 

 
                                                           
infrastructure investment in the EU and beyond would create investment opportunities for EU 
businesses. It would also help ensure the coherence of public support and sustained research 
and innovation in new clean energy technologies and sources, where the private sector does 
not deliver in market failure areas. It will be important to scale up emerging technologies and 
make  them  affordable  and  accessible  to  developing  economies  to  ensure  their  large-scale 
uptake.  In  parallel,  a  more  circular  economy  and  realistic  pricing  of  externalities  would 
decrease energy consumption in the EU.  

The decarbonisation of energy will have long-term effects on geopolitical dynamics, with 
new strategic dependencies emerging and others fading away. It will impact both oil and 
gas producing economies and leaders in renewable power. Efforts will be needed to ease this 
transition  and  manage  the  decline  of  revenue  in  vulnerable  producing  states.  Significant 
progress in reducing associated emissions from production (such as methane from fossil gas) 
will presage an orderly transition. New technologies will be key in this context. Making them 
available and  affordable  will benefit the EU, and could  help  emerging  economies leap-frog 
fossil-based  infrastructure  and  adopt  less  carbon  intensive  alternatives.  This  type  of 
cooperation  also  offers  economic  and  connectivity  opportunities  for  the  EU.  Moreover,  the 
decentralised nature of future energy networks, coupled with high cyber defence capacities, 
will support the EU’s resilience, with power generation distributed much more widely than in 
today’s centralised, more vulnerable energy systems.  

3.  STRENGTHENING  CAPACITY  IN  DATA  MANAGEMENT,  ARTIFICIAL  INTELLIGENCE 

AND CUTTING EDGE TECHNOLOGIES 

The EU’s digital sovereignty will depend on capacity to store, extract and process data, 
while satisfying the requirements of trust, security and fundamental rights.  The digital 
economy, especially data processing, high-performance cloud and edge computing, may have 
a  positive  effect  on  the  EU’s  economy  and  competitiveness48.  EU  companies  and  public 
administration  authorities  will  increasingly  adopt  user  and  entity  data  analytics,  Internet  of 
Things,  and  artificial  intelligence.  Such  technologies  have  wide  and  varied  applications49. 
The EU has introduced significant investment objectives and funding instruments to promote 
the  development  and  deployment  of  next-generation  and  disruptive  cloud  and  edge 
technologies.  With  the  increasing  use  of  data  for  industrial  and  business  applications,  a 
strategic  approach  to  the  development  and  deployment  of  industrial  Internet  of  Things 
systems, 5G/6G, and edge computing with the ability to manage and quickly analyse big data 
will be crucial for achieving the objectives of the twin transitions.  

Big data and advanced analytics are evolving rapidly, with the USA and China in the lead. 
They  provide  real-time  early  indicators  of  possible  crises,  early  detection  of  illnesses  and 
long-range detection of military activity. Use of such analytics in decision-making is likely to 
increase.  From  an  EU  perspective,  it  is  important  that  these  technologies  are  developed 
respecting fundamental rights and EU values, especially where their development and uptake 

48   The  effect  of  the  digital  economy  on  GDP  and  productivity  is  still  debated.  According  to  recent 
macroeconomic  simulations,  the  cumulative  additional  GDP  contribution  of  new  digital  technologies  by 
2030 could amount to EUR 2.2 trillion in the EU, a 14.1% increase from 2017 (DG CNECT (2020), Shaping 
the  digital transformation in Europe). At the same time, some economists point out that new technologies 
have little effect on GDP and productivity.  

49   For  instance,  multimodal  connected  and  automated  mobility  and  seamless  data  sharing  could  support  the 
more sustainable move of people and goods, greatly reduce road fatalities and injuries, and enhance quality 
of life and the efficiency of transport systems. 

10 

 
                                                           
relies  on  massive  data  volumes,  including  personal  data.  The  development  and  uptake  of 
critical  technologies  relies  on  massive  data  volumes.  Currently,  data  produced  in  the  EU  is 
largely stored and processed in cloud storage operated by non-EU providers, which makes it 
subject  to  third  country  jurisdictions.  This  creates  strategic  dependencies  and  risks  for 
cybersecurity,  data  protection,  access  and  security.  It  also  implies  that  non-EU  providers 
benefit commercially from processing this data. The EU should build capacities to store data 
and  ensure  access  to  open,  secure  and  transparent  data  and  high  data-rated  connection 
availability. It should also safeguard its leading edge in the development and deployment of 
trustworthy  artificial  intelligence.  It  should  promote  standards  and  values  with  trusted 
partners around the world. 

Faced  with  the  exponential  increase  in  demand  for  semiconductors,  the  EU  needs  to 
position  itself  more  firmly  in  the  development  and  production  of  next-generation 
technologies.  Access  to  semiconductors  could  be  compromised  by  limited  production 
capacity, and shortages can heavily affect business continuity of different industries. The EU 
has  notable  strengths  and  is  home  to  a  crucial  supplier  of  manufacturing  equipment  to  all 
leading  manufacturers,  but  it  is  lagging  behind  in  the  production  of  next-generation 
processors  and  advanced  semiconductors.  Taiwan,  China,  South  Korea50  and  the  USA  are 
investing  heavily  in  boosting  their  domestic  production  of  semiconductors.  Furthermore, 
chipmakers  in  Taiwan,  South  Korea,  Japan  and  the  USA  have  announced  massive  private 
investments  in  new  production  capacities.  To  stay  in  the  race,  the  EU  needs  to  invest  in 
capabilities  for  the  next  generation  of  processors  and  semiconductor  chips.  This  requires  a 
tightened screening of foreign take-over of the European production capacities, investments 
in research and development, and setting favourable conditions across the value chain. 

4.  SECURING AND DIVERSIFYING SUPPLY OF CRITICAL RAW MATERIALS 

Critical raw materials are essential for the EU’s twin transitions. The expansion of green 
technologies, such as those underpinning wind and solar power, domestic energy storage, and 
the production of batteries for electric vehicles will drive up demand for raw materials such 
as  cobalt,  lithium,  graphite,  manganese  and  nickel  in  the  next  two  decades51.  However,  the 
challenge  goes  beyond  green  technologies.  For  instance,  the  sector  for  small  drones,  for 
which  China  delivers  more  than  a  third  of  the  raw  materials,  is  expected  to  grow 
exponentially between now and the 2030s, with  high potential for the civil and commercial 
sub-sectors,  and  sharply  increasing  demand  for  gallium,  indium,  scandium  and  titanium, 
among  others.  The  defence  industry  relies  heavily  on  critical  raw  materials,  for  example 
almost half of the materials needed in aircraft production52 come from non-EU countries. The 
increase  in  demand  for  critical  raw  materials  is  expected  to  coincide  with  an  upturn  in  the 
major suppliers’ (Figure 4) readiness to impose export restrictions53. 

50   China is investing over USD 200 billion under the ‘Made in China 2025’ plan, with the ambition of reaching 
70% autonomy in chip-making by 2025. South Korea plans to invest USD 450 billion in semiconductors by 
2030 with a focus on manufacturing technologies. Taiwan Semiconductor Manufacturing Company TSMC 
is investing over USD 100 billion in three years in expanding production capacity.  

51   European Commission (2020),  Critical raw materials for strategic technologies and sectors in the EU  –  a 

foresight study. 

52   Critical raw materials such as magnesium, niobium, germanium, borates, cobalt and beryllium and the rare 

earth elements, such as dysprosium, samarium, neodymium, praseodymium, and yttrium. 

53   European Commission (2021), Raw Materials Scoreboard, 3rd Edition. 

11 

 
                                                           
Figure 4: Main EU-suppliers for critical raw materials54 

A  smart  mix  of  industrial,  research  and  trade  policies with  international  partnerships 
could ensure sustainable and diverse supply. The EU faces challenges relating to access, 
limited diversification, supply disruptions and insufficient processing, recycling, refining and 
separation capacities. The EU needs to prepare for a future erosion of critical supply security 
due to major factors shaping the geopolitical environment: state fragility, economic coercion, 
and climate change. In most cases, industry is best placed to reduce strategic dependencies by 
diversifying  supply,  making  greater  use  of  secondary  raw  materials,  and  substitution. 
However,  the  potential  for  supply  diversification  for  many  critical  raw  materials  is  rather 
limited  due  to  geographically  limited  sources  or  de  facto  mono-  or  oligopolies.  Industry’s 
efforts to secure access  to  critical  raw materials  and reduce its demand (through efficiency, 
prolongation  of  product  lifetimes  and  circular  economy)  require  a  clear  long-term  strategy. 
Finally,  novel  ways  of  sourcing,  such  as  seabed  and  space  mining  need  to  be  explored  in 
accordance with internationally agreed principles and commitments. 

5.  ENSURING FIRST-MOVER GLOBAL POSITION IN STANDARD-SETTING 

The  EU  is  in  competition  for  ‘first  mover’  advantage  in  standard-setting.  This  is 
particularly  relevant  in  emerging  technologies  (and  related  products  and  services),  such  as 
artificial intelligence, blockchain, quantum, cyber security, sensitive and specialised data (e.g. 
in  the  fields  of  health  and  space),  digital  currencies  and  chemicals.  Other  priority  fields 
include green technologies such as hydrogen, energy storage, offshore wind and sustainable 
transport. Our trading partners are taking more assertive actions in terms of standard-setting, 
e.g.  China  is  working  on  a  ‘China  standards  2035’  plan  to  identify  next-generation 
technologies  that  it  could  impose  on  the  140  countries  participating  in  the  Belt  and  Road 
Initiative.  However,  Chinese  state  capitalism  is  not  always  compatible  with  open  global 
regulation, human-centred standards and sustainable values. 

The  EU’s  track  record  in  setting  internal  rules  and  de  facto  international  standards 
provides a solid basis to address this challenge. The so called ‘Brussels effect’55, whereby 

54   JRC (2021), Shaping and securing the EU’s Open Strategic autonomy by 2040 and beyond.  
55   Bradford A. (2020), The Brussels effect – how the European Union rules the world. 

12 

 
 
                                                           
multinational corporations comply with EU-level regulation, is a by-product of the stringency 
of  that  regulation  and  the  size  of  the  single  market.  The  EU’s  trade  position  is  also  a  key 
driver  in  its  regulatory  and  standard-setting  power,  including  in  future  key  markets  and 
technologies. The EU is the biggest player in world trade and the number one trading partner 
for 74 countries, more than China (66) and the USA (31). It is the number one trading partner 
for  Asia,  Africa,  the  USA,  the  Western  Balkans  and  the  EU  neighbourhood56.  The 
international  acceptance  of EU standards is  crucial  for its  influence in  the  global order and 
leadership on climate change, sustainability and protection of consumers, personal data and 
rights  at  work.  To  this  end,  the  EU  will  further  engage  in  active  regulatory  cooperation, 
ensuring a leading role in international norm setting organisations, such as the International 
Organization for Standardization. 

6.  BUILDING RESILIENT AND FUTURE-PROOF ECONOMIC AND FINANCIAL SYSTEMS 

A resilient and stable economy is critical for addressing the EU’s long-term challenges. 
The  EU  should  further  increase  the  resilience  and  growth  potential  of  its  economy  by 
addressing  the  remaining  vulnerabilities  in  order  to  facilitate  the  ongoing  transitions  and  to 
withstand future shocks. Solid economic fundamentals, productivity, investments and reforms 
will  determine  the  EU’s  future  economic  performance,  linked  with  positive  financing 
conditions for the public and private sector.  

Europe’s  social  market  economy  is  also  key  to  its  democratic  model,  protecting  people 
against  social  risks  and  their  consequences.  The  single  market  gives  a  strong  basis  for  a 
recovery  and  the  resilience  of  the  EU  industry,  and  to  facilitate  the  green  and  digital 
transitions.  To  be  accepted,  these  transitions  must  be  fair  and  accompanied  by  stronger 
economic and social convergence. The COVID-19 crisis has highlighted the importance of an 
open,  competitive  and  fully  functioning  single  market  to  enable  businesses  to  grow  to  the 
scale needed to compete globally. 

The  EU’s  financial  system  will  undergo  profound  shifts  as  a  result  of  climate  and 
technological  changes  and  of  Brexit.  Sustained  political  determination  to  remove  the 
remaining obstacles to market integration and to fully implement Capital Markets Union and 
Banking  Union  is  therefore  essential  to  diversify  and  deepen  sources  of  funding  for  EU 
companies,  improve  saving  opportunities  for  EU  citizens,  strengthen  the  EU’s  ability  to 
absorb  shocks  and  support  stronger  domestic  financial  markets.  This  can  also  address 
supervisory  arbitrage  between  Member  States  and  with  neighbouring  third  countries.  The 
withdrawal of the United Kingdom as a major financial hub from the EU strengthens the need 
to further deepen the Union’s capital markets, and EU markets exhibited strong adaptability 
and  resilience.  Nevertheless,  medium-term  challenges  to  financial  stability  and  resilience 
remain.  Most  importantly,  EU  market  participants  maintain  excessive  reliance  on  essential 
financial  infrastructure  outside  the  EU,  which  could  amplify  financial  stability  risks. 
Moreover, the supervisory capacity in the EU needs to be adequately structured in view of the 
continuing reconfiguration of value chains and relocation of businesses to the EU following 
Brexit. 

The  EU  financial  system  also  has  a  key  role  to  play  in  financing  the  transition  to  a 
climate-neutral economy and resilience against environmental degradation. The EU will 

56   COM(2021) 66. 

13 

 
                                                           
need  EUR  470  billion  in  additional  investment  per  year  to  reach  its  2030  climate  and 
environmental  targets,  which  will  require  a  massive  mobilisation  of  private  capital. 
Institutional and retail investors are showing a growing interest in sustainable investment, as 
witnessed  by  the  five-fold  increase  of  net  capital  flows  attracted  by  equity  funds  adopting 
environmental, social and governance (ESG) strategies in the 10 months after such adoption, 
compared to 10 months before57. Greater transparency of the ecological footprint of financial 
products and ratings, as well as access to reliable sustainability-relevant data, will be essential 
for financing an orderly transition and to prevent ‘green-washing’.  

Climate  change  and  environmental  degradation  can  also  affect  financial  stability 
directly because of more frequent and more severe extreme weather events. Only 30% of 
all economic losses  are  currently insured.  Investments in  unsustainable activities and assets 
are  increasingly  likely  to  become  stranded  and  financial  stability  could  be  compromised  in 
case of a disorderly and sudden reaction to the transition. The EU financial system needs to 
systematically  integrate  sustainability  risks  and  impacts  in  financial  decision-making,  and 
integrate long-term risk management and disaster risk financing strategies.  

The digital age will also influence payment means and capital markets, with a growing 
role of crypto-assets and the development of digital currencies. Digital finance can create 
new opportunities for citizens and businesses, but consumer protection needs to be ensured. 
A strong, competitive, properly regulated and supervised EU digital finance sector is needed.  

The establishment of the Chinese digital renminbi is rapidly progressing and other countries 
are  also  working on their own digital  currencies. The  central bank digital currencies would 
also impact the current model of central banks, the conduct of monetary policy, and consumer 
protection  systems.  The  European  Central  Bank,  together  with  the  Commission,  is  actively 
engaged in work on the concept of a digital euro, which can bring significant benefits to EU 
citizens and businesses. Yet, to reap the benefits of a public digital euro, it is key to address 
potential  challenges  for  EU  policies,  such  as  those  related  to  financial  intermediation  and 
stability.  

A wider use of the euro in international trade and services, including in energy markets, 
and EU-wide solutions for instant payments would strengthen the strategic clout of the 
EU.  It  would strengthen the EU’s resilience, including to  the extra-territorial  application of 
sanctions  by  third  countries.  It  would  enable  the  EU  to  further  benefit  from  international 
financial markets, while managing external risks and avoiding strategic dependencies. At the 
same  time,  weaknesses  in  the  integrity  of  third  country  service  providers,  markets  and 
infrastructures might create risks.  

The EU needs to continue to be on the global forefront in the fight against money laundering 
and terrorist financing and ensure appropriate safeguards against these illicit purposes. 

7.  DEVELOPING AND RETAINING SKILLS AND TALENTS MATCHING EU AMBITIONS 

Clear  responses  will  be  needed  to  successfully  face  demographic  trends  and  close 
existing  skills  gaps  in  the  context  of  the  twin  transitions.  While  greater  labour  force 
participation  is  needed,  labour  market  and  social  policies  will  need  to  be  adjusted  to  avoid 
increase  in  socio-economic  inequalities  and  ensure  fair  working  conditions,  decent  income 

57   European Financial Stability and Integration Review (EFSIR), SWD(2021) 113.  

14 

 
                                                           
and access to social security. Close cooperation with social partners is crucial to respond to 
this new reality. While ensuring good working conditions and embedding these within active 
ageing policies,  prolonging the effective retirement  age by  one  year could add four million 
people to the labour market58. Women’s greater labour force participation,  through targeted 
measures that ensure gender equality and work-life balance, would also support employment 
rates. This is particularly the case in Member States with women’s participation rates below 
the  EU  average59.  Greater  labour  force  participation  would  bring  economic  and  social 
benefits  across  the  EU,  e.g.  a  lower  ratio  of  dependent  non-workers  to  workers  and  higher 
labour  force  participation.  In  addition,  new  approaches  to  working  patterns  would  help 
mitigate  the  downsides  of  population  ageing.  Well-managed  legal  migration  that  addresses 
the  skills  needs  and  gaps,  matched  with  effective  integration  policies,  would  make  an 
important contribution to the EU’s labour market.  

Young  people  deserve  better  access  to  quality  jobs.  Continued  support  for  youth 
employment  through  targeted  support  schemes  will  be  needed.  The  next  generation  is 
increasingly  ready  for  the  digital  transition60,  although  the  challenge  of  bridging  the  digital 
skills  gap  and  getting  more  young  women  to  study  STEAM  (science,  technology, 
engineering, arts and mathematics) subjects remains. Easing the transition from education to 
employment, creating quality entry-level jobs and engaging youth in policy dialogue will also 
be key for young people entering the labour market.  

Harnessing the job opportunities of the twin transformations will require policy action 
supporting  the  transition  to  new  types  of  jobs.  This  includes  support  to  regions  and 
workers  in  sectors  that  will  undergo  transition  and  the  right  mix  of  support,  incentives  and 
framework  conditions  for  companies  from  traditional  and  new  sectors.  Adjustments  in 
education  and  training  systems  will  also  be  needed,  as  skills  requirements  and  education 
levels  are  increasing  fast  in  the  green  and  digital  economy,  faster  than  in  the  economy 
overall61.  The  EU’s  future  labour  force  will  likely  be  better  educated  and  more  capable  of 
adapting to the changing nature of work and augmented intelligence. By 2050, 54% of all job 
market participants are projected to have post-secondary education62. STEAM competencies, 
digital  skills  and  literacy,  together  with  sector-specific  expertise  to  achieve  the  green 
transition  (e.g.  in  renewable  energy,  circular  economy,  new  green  technologies  or  nature-
based solutions) will be indispensable for successful labour market and social integration. To 
ensure access to the skills of tomorrow, the EU’s education and training systems will need to 
remain  on  the  global  cutting  edge.  The  EU  should  also  incentivise  more  of  its  talents  (at 
universities, in research institutions or businesses) to stay in Europe63 and mitigate brain drain 
between Member States and regions. 

8.  STRENGTHENING SECURITY AND DEFENCE CAPACITIES AND ACCESS TO SPACE 

58   European Commission (2020), Employment and social developments in Europe. 
59   Current levels range from 47.5% to 79.3%, see COM(2020) 152.   
60   The proportion of young adults with above-basic digital skills is over 50% and rising; see the JRC’s ongoing 
work on the ‘digital resilience’ dashboard, based on Eurostat data (digital skills) and PREDICT CORE data 
(available places in advanced technologies). 

61   European Commission (2019), Employment and social developments in Europe. 
62   JRC (2019), Demographic scenarios for the EU: migration, population and education. 
63   PPMI,  IDEA  Consult  and  WIFO  (2020),  MORE4  study,  Support  data  collection  and  analysis  concerning 

mobility patterns and career paths of researchers.  

15 

 
                                                           
Action  is  needed  to  mitigate  the  increased  risk  of  conflict,  internal  instability  and 
disruption of critical infrastructures. The EU needs to continue to play an essential role in 
preventive diplomacy and support, adapting and upgrading its tools to ensure effectiveness of 
its actions. Building trust and coordination amongst Member States, as well as the capacity to 
better  anticipate  risks,  while  learning  from  experience,  could  provide  the  EU  with  greater 
influence  and  the  ability  to  act  jointly  on  defence  and  security  matters.  The  EU  should 
continue  to  support  Member  States  to  develop  adequate  tools,  including  to  build  resilience 
and  respond  to  hybrid  threats  in  full  respect  of  the  EU’s  legal  and  ethical  framework.  The 
increased  likelihood  of  extreme  weather  events,  future  pandemics  or  other  natural  and 
manmade  disasters  reaffirms  the  need  for  a  stronger  EU  response  and  cooperation  on  civil 
protection, including to  improve prevention, preparedness  and response to disasters such as 
floods, wildfires and infectious diseases64. 

In  order  to  enhance  its  defence  capabilities  and  operations,  the  EU  should  commit  to 
joining  forces  and  strengthening  the  coherence  of  recently  established  cooperation 
instruments and initiatives. The EU needs to ensure its capacity to defend - autonomously if 
needed - its essential security interests in a challenging international environment marked by 
great  power  competition  and  a  race  to  technological  leadership.  The  EU  has  recently  made 
progress  on  defence  through  the  launch  of  several  important  initiatives.  The  remaining 
vulnerabilities  include  a  relatively  low  level  of  expenditure,  fragmentation  of  demand  and 
supply, and research, innovation and manufacturing gaps65. At the international level, while 
promoting  a  rules-based  international  order  and  strongly  cooperating  with  NATO,  the  EU 
will  have  to  enhance  its  preparedness  for  a  more  conflictual  world.  The  development  of 
indigenous defence capabilities will increase the capacity of the EU to promote such a rule-
based international order, while strengthening the role of EU Member States in NATO.  

It  is  essential  that  the  EU  supports  autonomous,  reliable  and  cost-effective  access  to 
space.  Space  technologies,  together  with  artificial  intelligence,  are  strategic  means  of 
countering  threats  and  anticipating  future  risks,  such  as  hybrid  threats  including  cyber 
espionage66.  They  are  important  for  the  future  of  the  EU’s  communications,  Earth 
observation, manufacturing, security, and an essential ingredient of the twin transitions. They 
help  monitor  climate  change,  transportation,  security  and  defence  and  are  key  to  the 
functioning  of  critical  infrastructure  and  technology.  Moreover,  the  weaponisation  of  space 
by  EU  rivals  is  increasingly  supported  by  new  technologies  such  as  anti-satellite  weapons. 
The space sector contributes EUR 46-54 billion to the EU economy67 and is expected to grow 
globally to EUR 1 trillion by 204068. The EU is currently a world leader in some areas (e.g. 
satellite services), while other areas (e.g. space launchers and space missions) are dominated 
by the USA, China and Russia, and increasingly by private actors. Other space-faring nations 
have  a  very  strong  domestic  market  –  effectively  an  anchor  customer  for  a  considerable 

64   Under  the  current  EU  Civil  Protection  Mechanism  the  EU  Member  States  and  Iceland,  Norway,  Serbia, 
North  Macedonia,  Montenegro,  and  Turkey  cooperate  on  civil  protection  to  improve  prevention, 
preparedness  and  response  to  disasters.  Constant  monitoring  by  the  Emergency  Response  Coordination 
Centre ensures rapid deployment of emergency  support through a direct link  with  national civil protection 
authorities. Specialised teams and equipment, such as forest fire-fighting planes, search, rescue, and medical 
teams can be  mobilised at short notice for deployments inside and outside the EU to support the response 
efforts of countries affected by disasters. 

65   European Defence Agency (2020), CARD report. 
66   NATO (2020), Science & technology trends 2020-2040: exploring the S&T edge. 
67   European Commission (2020), Foresight ON security newsletter. 
68   Morgan Stanley (2016), The space economy’s next giant leap.   

16 

 
                                                           
launch  volume  (including  launches  for  defence  and  national  security).  Lacking  this,  EU 
launcher  companies  are  at  a  competitive  disadvantage  in  the  global  market,  and  depend  on 
the  commercial  market  to  a  much  higher  degree  than  competitors  from  China,  Russia,  the 
USA, or Japan.  

The EU should acknowledge the EU space infrastructure as strategic and maximise the 
benefits  of  new  technologies,  such  as  advanced  launchers,  nano-satellites,  robotics,  large 
constellations,  on-orbit  operations  or  quantum-based  applications  (e.g.  for  secure 
communications and Earth observation for secure connectivity). It should also prepare itself 
for new space activities and promote on-orbit services or space data centres, building on its 
expertise in areas where it has a competitive industrial capacity, such as telecommunications 
and Earth observation. 

9.  WORKING  WITH  GLOBAL  PARTNERS  TO  PROMOTE  PEACE,  SECURITY  AND 

PROSPERITY FOR ALL 

Multilateralism must adapt to remain fit for purpose.  The COVID-19 pandemic and the 
climate  emergency  are  perfect  illustrations  of  the  need  for  multilateral  solutions  and  a 
coordinated global cooperation on crisis preparedness and response. In both cases, support to 
the  least  developed  or  more  fragile  partner  countries  is  essential  to  overcoming  challenges 
ahead, leaving no one behind. A truly inclusive, networked multilateralism69 is the only way 
forward. That is why the EU is committed to striving for a rules-based global order with the 
United  Nations  at  its  core.  This  will  involve  preserving  what  works  well,  reforming  what 
needs  to  change,  and  extending  effective  global  governance  to  new  areas.  The  EU  should 
trigger  and  facilitate  discussions  on  the  necessary  reforms  of  global  governance.  It  should 
support  the  ongoing  reform  of  the  UN  on  the  basis  of  a  clear  set  of  rules  and  values. 
Restoring the dispute settlement system to full functionality is also a pressing priority in the 
necessary modernisation of all of the World Trade Organization’s (WTO) functions to ensure 
it  can  deal  with  the  challenges  of  global  trade.  The  governance  of  international  financial 
institutions,  such  as  the  World  Bank,  the  International  Monetary  Fund  and  the  New 
Development  Bank70, should better reflect  emerging regional and  global  challenges.  Global 
economic  governance  should  address  unwanted  spill-overs  of  monetary,  fiscal  and 
macroeconomic policies on emerging markets. 

Acting  more  assertively  will  be  key  in  countering  coercive  action  or  extra-territorial 
sanctions  imposed  by  third  countries.  Open  trade  and  investment  is  one  of  the  EU’s 
fundamental  strengths,  but  the  EU  will  need  to  counter  economic  pressure  and  act  where 
dispute  settlement  under  WTO  or  bilateral  agreements  are  blocked.  Stronger  trade  defence 
instruments need to protect EU operators from unfair trade practices and avoid undermining 
the  EU’s  strategic  priorities.  The  potential  security  or  public  order  risks  arising  from  the 
acquisition  or  control  of  a  particular  business,  infrastructure  or  technology  call  for  a  fully-
fledged screening mechanism for foreign direct investment and measures to address potential 
distortive  effects  of  foreign  subsidies.  EU  export credits  can  ensure  a  level  playing  field  in 
non-EU markets in which foreign competitors increasingly have financial backing from their 
governments.  

69   See, for instance, https://www.un.org/sg/en/content/sg/speeches/2020-09-21/remarks-general-assembly-

ceremony-marking-the-75th-anniversary-of-the-united-nations. 

70   The  New  Development  Bank  aims  to  mobilize  resources  for  development  projects  in  BRICS,  emerging 

economies and developing countries. 

17 

 
                                                           
The EU will also need to reinforce and develop strategic as well as issue-based coalitions 
and  partnerships  with  specific  countries  and  regions.  The  reinvigorated  transatlantic 
alliance,  the  integration  of  the  Western  Balkans,  closer  cooperation  with  Turkey  and  the 
neighbourhood  countries,  the  strategic  partnership  with  Africa,  connectivity  in  the  Indo-
Pacific and stability in Central Asia are all geopolitical priorities. China is simultaneously a 
cooperation  partner  for  certain  shared  objectives,  a  negotiation  partner,  an  economic 
competitor,  and  a  systemic  rival.  China’s  increasing  presence  in  the  world,  including  in 
Europe,  must  be  accompanied  by  assuming  greater  responsibilities  for  upholding  the  rules-
based international order, as well as greater reciprocity, non-discrimination and openness of 
its  domestic  system71.  With  Russia,  the  EU  needs  to  continue  its  principled  approach  of 
defending its interests and promoting values based on the implementation of the five agreed 
principles72. The EU must insist that the Russian leadership demonstrate a more constructive 
engagement  and  stop  actions  against  the  EU  and  its  Member  States  and  partner  third 
countries. This is indispensable to turn the currently unproductive and potentially dangerous 
tide in this important relationship. Cooperation with the G7 and the G20 will also continue to 
be important. 

The EU should strengthen its partnerships with the international organisations that are 
central  to  European  and  global  stability.  It  has  reached  unprecedented  levels  in  its 
cooperation with the North Atlantic Treaty Organization (NATO), the bulwark of European 
defence73. The EU-NATO partnership is an indispensable pillar of EU defence and it will be 
strengthened  further74.  The  EU  should  also  further  strengthen  cooperation  with  the 
Organization  for  Security  and  Co-operation  in  Europe  on  issues  of  common  interest,  and 
continue a close relationship with the Council of Europe that bolsters our common respect for 
human rights,  democracy  and the rule of law.  Inter-regional  cooperation  with  organisations 
such as the African Union, the Community of Latin American and Caribbean States and the 
Association of South East Asian Nations provides important levers for regional development 
and stability, and helps advance the EU’s global agenda. The EU will also need to develop a 
coherent  stance  towards  other  international  actors  and  actively  pursue  cooperation  with 
partners  ready  to  work  on  common  solutions  to  global  challenges,  and  peacefully  and 
sustainably managing the global commons (e.g. oceans, space). 

The  EU  stands  ready  to  lead  global  coalitions  on  climate  and  environmental  action. 
With the European Green Deal75 and its key initiatives, such as the ‘fit for 55’ package76, the 
EU  is  pursuing  a  transformation  of  the  economy  and  comprehensive  policies  on  climate, 
biodiversity  and  the  environment77.  The  EU  is  committed  to  delivering  on  the  Paris 
Agreement, the United Nations’ 2030 Agenda and its Sustainable Development Goals and the 
Post-2020  Biodiversity  Framework.  Their  achievement  is  increasingly  challenged  by  the 
consequences  of  the  COVID-19  crisis.  For  example,  the  pandemic  could  undo  years  of 
development  progress  in  Africa,  where  countries  are  already  spending  on  average  30%  of 

71   European Commission, (2019), EU-China: a strategic outlook. 
72   See JOIN(2021) 20. 
73   Sixth progress report on the implementation of the common set of proposals endorsed by the EU and NATO 

Councils on 6 December 2016 and 5 December 2017 (June 2021). 

74   NATO (2021), Brussels Summit communiqué. 
75   COM(2020) 640. 
76   COM(2021) 550. 
77   EU  greenhouse  gas  emissions  were  reduced  by  24%  between  1990  and  2019  while  the  economy  grew  by 
around 60% over the same period. European Commission (2019), the EU’s track record on climate action.  

18 

 
                                                           
their revenues on servicing debt (up from 20% before)78. As the EU accounts for just 8% of 
global greenhouse gas emissions, and with 85% of the world’s GDP growth expected to come 
from  elsewhere  by  202479,  the  EU’s  ambitious  internal  agenda  needs  to  be  matched  with 
equally ambitious global cooperation. The extent to which emerging economies and societies 
in  particular  can  decouple  human  and  economic  development  from  resource  intensive 
production and greenhouse gas emissions will be decisive. The EU should continue playing a 
key  role  in  maximising  support  for  the  transition  at  global  level,  beyond  succeeding  in  its 
own  transformation.  The  EU  should  strengthen  a  comprehensive  EU-led  green  diplomacy 
with  a  priority  given  to  climate  change  and  environmental  action,  particularly  under  the 
United  Nations  Climate  Change  Conferences  framework  and  other  relevant  multilateral 
organisations. 

‘Connectivity agendas’80  should be embedded in the EU’s strategic partnerships.  They 
are  part  of  the  geopolitical  toolbox.  The  USA  has  the  BUILD  Act  and  Japan  has  the 
Partnership  for  Quality  Infrastructure.  Through  its  Belt  and  Road  Initiative,  China  is 
advancing its economic, political and security interests across the world, including in Europe. 
In Africa, China has been by far the largest infrastructure developer over the last decade, with 
an estimated 10 000 Chinese companies operating on the continent. After launching the Blue 
Dot  Network  with  Japan  and  Australia,  the  USA  has  put  forward  the  ‘Build  Back  Better 
World’  initiative  (B3W)  in  the  context  of  the  G7.  China  and  the  USA  differ  in  their 
approaches, but both are ahead of the EU in their influence over internet infrastructures and 
those that depend on them. The EU has experience developing connectivity and can build on 
promising  partnership  experiences  with  Japan  and  India.  However,  while  the  EU  has  laid 
down  the  first  building  blocks  of  an  EU  connectivity  strategy81,  it  needs  to  be  developed 
further and  aligned with the rapidly  evolving  realities.  In particular, the  EU could  focus on 
sustainable transportation, resilient and secure digital infrastructure networks, and pervasive 
information connectivity, which are also space-based. A Team Europe approach82 will be key 
to achieve the necessary scale of implementation. 

International ocean governance is an increasingly strategic area. Oceans are an essential 
regulator  of  the  climate,  producing  half  of  the  oxygen  in  the  Earth’s  atmosphere  and 
absorbing 25% of CO2 emissions. They are home to  a fragile ecosystem  that is  a source of 
nutritious  food  and  4.5  million  direct  jobs  in  the  EU.  The  cumulative  impacts  of  resource 
extraction and pollution have increased, with 31% of global fish stocks overfished and 4.8 to 
12.7  million  tonnes  of  plastic  waste  entering  the  ocean  each  year83.  With  the  world’s 
population expected to increase, human pressure on the ocean will intensify, calling for more 
effective, cross-cutting and integrated ocean governance built on strong cooperation. 

78   JRC (2021), Shaping and securing the EU’s Open Strategic autonomy by 2040 and beyond. 
79   COM(2021) 66.  
80   Connectivity  can  be  defined  as  bringing  countries,  societies  and  people  closer  together.  It  encompasses 
physical  and  institutional  social-cultural  linkages,  sectorial  agreements  as  well  as  regulatory  and  technical 
cooperation in concrete sectors such as transport, energy and digital. 

81   The  EU’s approach to connectivity  has been  set out  in the  Joint Communication  “Connecting Europe and 

Asia - Building blocks for an EU Strategy”, JOIN(2018) 31. 

82   Team  Europe  consists  of  the  EU,  Member  States  and  their  diplomatic  networks,  finance  institutions 
including national development banks and implementing agencies, as well as the European Investment Bank 
and the European Bank for Reconstruction and Development. 

83   European Environment Agency (2019), The European environment - state and outlook 2020.  

19 

 
                                                           
To  consolidate  the  EU’s  role  as  a  leading  global  actor  on  human  rights,  partnerships 
with countries and organisations that share democratic values are key. Defending human 
rights  requires  using  all  available  tools,  including  the  EU  Global  Human  Rights  Sanctions 
Regime,  political  and  human  rights  dialogues,  strategic  partnerships  with  international  and 
regional  organisations  and  proactive  engagement  in  international  fora.  It  also  calls  for 
stronger  engagement  with  the  private  sector  to  promote  responsible  business  conduct.  To 
globally  promote  democracy  and  prosperity,  education  should  also  be  a  core  international 
policy pursued by the EU together with its partners. 

10. STRENGTHENING THE RESILIENCE OF INSTITUTIONS 

Public  institutions  and  administrations  need  to  be  responsive  to  societal  concerns  and 
effective in delivering policies.  Increased polarisation shows the need for participatory and 
inclusive governance to enhance trust and legitimacy at all levels. Institutions and processes 
need to increase their resilience, adapt and innovate to cope with new challenges and deliver 
results  for  citizens.  New  forms  of  participatory  democracy,  new  technologies,  civic 
participation and grassroots innovations, as in the context of the Conference on the Future of 
Europe84, can enhance political participation and strengthen the resilience of our democratic 
systems.   

Countering  disinformation  and  ensuring  freedom  of  expression,  pluralistic  and  inclusive 
democratic debates and media freedom in the EU and beyond will depend on the continued 
development of common frameworks and practices. Partnerships with other global public and 
private players will be vital in ensuring a more robust and effective response. This must go 
hand  in  hand  with  the  promotion  of  free  and  fair  elections  and  the  protection  of  media 
freedom and pluralism. 

The  implications  of  current  and  future  trends  will  require  agile  policy  responses. 
Uncertainty,  volatility,  complexity  and  ambiguity  will  need  to  be  embraced  and  managed. 
Developing  strategic  foresight  capabilities  can  help  assess  the  impending  risks  and  better 
prepare  to  deal  with  crises  and  emerging  opportunities.  The  EU  Foresight  Network  of 
Ministers for the Future, and the related development of foresight capacities at national level, 
will be contributing to this. 

Greater preparedness also means better monitoring of resilience to withstand challenges 
and  undergo  transitions  in  a  sustainable,  fair  and  democratic  manner.  The  resilience 
dashboards85  developed  by  the  Commission  (in  cooperation  with  Member  States  and 
stakeholders),  as  announced  in  the  2020  Strategic  Foresight  Report,  are  an  important  step 
towards  a  more  integrated  approach  for  measuring  wellbeing  beyond  GDP.  Their 
multidimensional  approach  sheds  light  on  challenges  and  opportunities  ahead,  and  helps  to 
navigate societal transformation towards a more sustainable development path. The resilience 
dashboards will also contribute to the ex-post assessment of Europe’s recovery and resilience 
strategy, including vis-à-vis other key global players. 

IV. 

SETTING THE STAGE FOR TOMORROW’S POLICIES 

84   https://futureu.europa.eu/  
85   https://ec.europa.eu/info/strategy/strategic-planning/strategic-foresight/2020-strategic-foresight-

report/resilience-dashboards_en;  resilience  dashboards  are  monitoring  tools  for  assessing  the  EU’s  and 
Member  States’  vulnerabilities  and  capacities  across  four  dimensions:  social  and  economic,  green,  digital 
and geopolitical.  

20 

 
                                                           
The emerging global order is increasingly multipolar and contested. While we cannot be 
certain as to what the future holds, it is up to us to work towards the most favourable 
scenario to preserve and enhance the EU’s capacity and freedom to act, based on a clear 
understanding  of  megatrends,  uncertainties  and  opportunities.  This  Communication 
underpins a shared long-term vision of the EU’s open strategic autonomy on the path towards 
2050,  highlighting  the  need  for  increased  coherence  across  time  horizons  and  between  the 
domestic and external policy agenda across ten areas of action (Figure 5).  

Figure 5: Key implications for the EU’s capacity and freedom to act 

21 

 
 
Inter  alia,  the  EU  will  resolutely  pursue  climate  neutrality  by  2050  and  step  up  its  global 
leadership in this respect. A more circular economy will be powered by decarbonised energy, 
green  and  digital  technologies,  and  world-class  talent.  The  twin  transitions  will  strengthen 
competitiveness,  generate  economic  and  social  opportunities,  and  contribute  to  the  global 
order,  while  reducing  strategic  dependencies.  A  digitally  hyperconnected  future,  driven  by 
big  data,  artificial  intelligence  and  the  quantum  jump  will  be  non-linear  and  fraught  with 
uncertainties. Given its profound and diverse impacts  across sectors, territories and society, 
technological  progress  needs  to  be  backed  by  a  strong  social  market  economy  and 
competitive  single  market.  It  also  requires  an  anticipatory  and  inclusive  approach  to 
education and training, empowering people to confidently navigate change. Encouraging and 
facilitating participation will also invigorate democracies. 

In  pursuing  global  leadership  towards  2050,  the  EU  will  not  turn  inwards  but  will 
remain  firm  on  its  principles  and  values  and  agile  in  its  conduct.  As  an  interconnected 
global  pole  in  a  multipolar  world,  it  will  continuously  leverage  its  close  international 
partnerships  to  promote  peace,  stability  and  prosperity,  presenting  a  united  front  against 
hostile  actors  and  common  challenges.  It  will  take  the  lead  in  effective  multilateral 
cooperation, while protecting EU citizens and the economy from unfair and abusive practices. 
The  EU  will  uphold  the  promise  of  achieving  the  twin  transitions  in  a  fair  and  democratic 
way  in  order  to  provide  the  next  generation  of  Europeans  with  the  ability  and  freedom  to 
chart their own course.  

The  next  Strategic  Foresight  Report  will  focus  on  a  better  understanding  of  the  twinning 
between the green and the digital transitions, i.e. how they can mutually reinforce each other, 
including through the use of emerging technologies. 

22