The Economics of “Buy-European”

The study examines the economic effects of a "Buy European" strategy for four key net-zero technologies: lithium-ion batteries, electrolysers, heat pumps and photovoltaic modules. It simulates the income effects that a complete switch to EU-internal manufacturing would have on the key production steps for these technologies by 2030.

"Public demand can promote green technologies from Europe, but the EU should take a cautious approach when setting binding 'Made in Europe' criteria," says cep economist André Wolf, assessing the project. There is a risk of price increases and politically induced supply bottlenecks. The Commission should therefore initially focus on a limited number of transformative technologies that are difficult to replace, are of high systemic and strategic importance, and offer great potential for future cost-reducing economies of scale.

A switch to 100% EU origin in key manufacturing stages of the four important net-zero technologies would create additional value-added potential of €43 to €50 billion in the EU in 2030 alone. However, in order to realise this potential, the EU must simultaneously address the serious supply-side barriers to increasing domestic production, in particular overly complex regulations, growing skills shortages and the lack of appropriately specialised regional manufacturing clusters.

The analysis also suggests that positive income effects would be distributed very unevenly across Member States, which could jeopardise political acceptance. This circumstance also argues in favour of a limited introduction of "Buy European" requirements. 

Background

On 4 March 2026, the EU Commission took a significant economic policy decision with the announcement of "Buy European" rules for net-zero technologies. This measure is intended to strengthen domestic production of key technologies such as electrolysers, heat pumps, lithium-ion batteries and PV modules, thereby advancing Europe's green transformation. However, this step contradicts WTO rules and marks a break with the EU's role as an advocate of rules-based global trade.