Cepi

Industrial Plan pinpoints an EU trend for deindustrialisation

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A legislative package proposed by the European Commission has been presented as a way to avoid an exodus of EU industries. While it falls short on measures aiming to reduce the industry’s dependence on fossils, it sends some positive signs to manufacturers turning towards a circular bioeconomy model.

A main element of the package, the Net Zero Industry Act, looks at boosting cutting-edge energy efficiency and renewable energy technology supply capacity in Europe and focuses on this specific manufacturing sector. It could go further in similarly supporting take-up of these technologies within the larger group of energy-intensive industries. It is lacking crucial provisions regarding permitting for installing renewable energy technology, and would not address the need for industry to rapidly deploy solar or wind energy on-site. In the paper industry alone an important potential has been identified.

Still, the Net Zero Industry Act is a welcome development, as access to affordable renewable energy will reduce Europe’s dependence on fossil fuels and in turn help the industry in meeting the ambitions of the EU Green Deal. But many projections show that such a transition will require more energy than is available today, while current energy prices have been putting Europe at a competitive disadvantage globally. The danger is that the Green Deal will only exacerbate the situation and make higher energy costs structural for Europe. The electricity market reform, also part of the legislative wave unveiled earlier this week, should strive to ensure that industry has reliable and affordable access to fossil-free energy.

Other proposals, including the Critical Raw Materials Act, show encouraging signs for industrial actors of the forest-based bioeconomy. A sector that already represents 20% of EU manufacturing companies and where Europe leads on technology and innovation at a global level. Today’s proposals formally introduce in legislation the concept of “material substitution” in the EU Commission’s thinking on materials and strategic autonomy. It could go further in actively supporting the transition to a circular bioeconomy, which has been identified by the Commission as key to Europe’s long-term competitiveness.