A skills shortage is posing a significant challenge to the green transition and investment plans of municipalities across Europe, according to new research. The European Investment Bank (EIB) conducted the 2022 Municipality Survey, which gathered insights from 744 municipalities in the European Union (EU). The findings highlight concerns related to funding, regulatory processes, and a lack of skilled labor required for successful green and digital transitions.

The survey revealed that 69% of municipalities expressed worry about the scarcity of environmental and climate experts involved in their development plans. This shortage of specialized professionals is hindering efforts to effectively address climate change and develop sustainable initiatives.

Approximately 60% of surveyed municipalities believe that their current investments in climate mitigation and adaptation infrastructure are insufficient over a three-year period. Consequently, 60% of these municipalities plan to increase their investments in these areas within the next three years. However, disparities were observed between developed and less developed regions, with the former planning to invest more in climate actions compared to the latter.

Despite some allocated funding, around 80% of respondents cited a lack of financial resources as a major obstacle to investment. In addition, lengthy and unclear regulatory processes further impede municipalities' ability to effectively implement green initiatives. These challenges need to be addressed to ensure smoother and more efficient investment processes.

The survey highlights that EU municipalities are currently prioritizing digital transformations over climate actions. Only 27% of municipalities were considered ahead in green measures, in contrast to 45% leading in digital skills and measures. This discrepancy underlines the need to balance investments between digitalization and climate change initiatives.

The demand for green skills has surged globally, creating a skills gap that hampers progress in the green sector. The World Economic Forum's research reveals that green job postings have grown almost twice as fast as the availability of green talent between 2022 and 2023. Companies are reluctant to hire workers without prior green skills or experience, leading to a need for upskilling and reskilling initiatives.

The EIB's chief economist, Debora Revoltella, emphasizes the importance of addressing the investment gaps in climate change infrastructure and the persistent skills shortage. Policymakers and stakeholders must prioritize sustainable and resilient investments to foster a greener and more digital future. Furthermore, efforts should be made to bridge the skills gap through comprehensive training programs, both at the municipality level and on a broader European scale. By overcoming these challenges, municipalities can successfully implement regional and pan-European investment programs, contributing to a sustainable and resilient future.