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The Industrial Deal – Is Europe mobilizing?

The Industrial Deal – Is Europe mobilizing?

In December 2019 under Ursula von der Leyen the EU Green Deal has been approved. The Green Deal is a set of policy initiatives by the European Commission with the aim of making Europe climate neutral. The task is to redesign the EU economy towards a sustainable future. Core elements of this deal are climate protection (first step 2030, second step 2050 to become climate neutral), green energy, a sustainable and circular economy, construction considering resources, sustainable and intelligent mobility, low emission environment, biodiversity and protection of the ecosystem, farm to fork. The idea is to review each existing law on its climate merits, and to introduce a new legislation on the circular economy, building renovation, biodiversity, farming, and innovation. A year later, the European Climate Law passed, which legislated that greenhouse gas emissions should be 55% lower in 2030 compared to 1990.

The key principles were:

  • to prioritize energy efficiency
  • to develop a power sector based on renewable resources
  • to secure an affordable EU energy supply
  • and to have a fully integrated, interconnected digitalised EU energy market

The main target is to eliminate the GHG emissions caused by human activities. Carbon dioxide CO2 from burning fossil fuels such as coal, oil, and natural gas, is one of the most principal factors in causing climate change. The largest emitters are China followed by United States.

In 2020 the EU revealed a strategy for a greener, cleaner energy future, the EU strategy for Energy System Integration, a framework for an energy transition, which compromises measures to achieve a more circular system, implement direct electrification and develop clean fuels including hydrogen.

A Circular Economy Industrial policy was announced in March 2020. A Sustainable Products policy focuses on textiles, construction, vehicles, batteries, electronics, and plastics. Waste shipments and legal and illegal exports out of the EU should be eliminated. The EU estimates that the green investment offensive until 2030 will cost an additional 350 billion Euro annually.

Building and renovation will be revised due to their currently unsustainable methods, non-renewable resources are often used. Buildings are supposed to become energy efficient and climate proof. Social housing will provide a reduction of energy bills for those less able to finance these costs, pollution emitted will be reduced. Digital technologies are crucial to achieving the European Green Deal targets.

Farm to Fork focuses on food sustainability and support of farmers and fishermen. Eliminating chemical pesticides (by 50%), healthy and climate friendly packaging, implementing 25% of organic agriculture, reduce nutrient depletion, the use of antimicrobials and food waste are some of the measures.

Sustainable and smart mobility for businesses and public transport will be implemented as well as the protection and enhancement of biodiversity.

Sustainable finance plays a key role in the European Green Deal. It is the set of financial regulations, standards, norms, and products that pursue the goals.

Analysing the Status Quo and considering the goals of the Green Deal it is easy to understand that the implementation of these goals and the transformation to a really sustainable world and protected planet are not easy to realize. There is no best practice yet, no elaborated skills set, education and structure as for employees and companies; few concrete rules, companies jumping on the train as for pure profit, keyword “Greenwashing” and high costs for realisation and transformation as technologies still have to be researched and developed.  

The concept is correct and urgently needed – worldwide. Approach and realisation are at the very beginning and often not in the right direction.

We urgently need clarity and confidence.” More than 70 CEOs of European companies demand additionally to the Green Deal an Industrial Deal. The CEOs fear the competition of China and the USA.

They adopt a declaration today at BASF in Antwerp, sustained by the EU Council Presidency in Belgium. The EU should sustain the European industry. The declaration is not published yet, but the content is known (Handelsblatt, 19.02.24).

The goal is to create qualitatively high jobs for European employees in Europe.

The core points are:

  1. To correct slowing down, complex and contractional regulations within the EU.
  2. The EU States should get away from the excessive individual legislation. They should strengthen green technologies with incentives via the internal market.
  3. Europe should develop into a “globally competitive energy supplier” and ensure the availability of raw materials.
  4. The EU should provide the framework for significantly stronger public financing of clean technologies in energy intensive industries.

The CEOs require that the “Industrial Deal” becomes part of the EU strategy for the next period until 2029. Most of the companies involved in the Industrial Deal declaration are energy intensive industries. They need to find a solution to high energy prices in Europe, in Germany and want to avoid dependency on other countries.

German Top managers of BASF, Evonik, Covestro, Bayer, steel – and cement producers present the declaration. Companies like Exxon Mobil from the US and Sappi support the declaration. Exxon plans to invest 20 billion US$ in climate friendly technologies, but not in Europe so far due to the complex regulations.

The execution of the European Green Deal would be an example for the rest of the world. The regulations vary and need to be adapted equally in Europe.

Generally speaking regulations have to diminish, they have to become manageable. They should be aligned with the reality of the industries, and support entrepreneurship. (Source: Handelsblatt 19.02.24)

A common EU energy strategy is needed to guarantee the industrial location Germany and Europe, to stay competitive.

The EU is a political and economic union of twenty-seven countries. It was established after World War II, initially as the European Coal and Steel Community in 1951 and then evolved into the European Community in 1957 under the Treaty of Rome. The EU as known today was formally established by the Maastricht Treaty in 1993.

The EU operates through a system of supranational independent institutions and intergovernmental negotiated decisions by the member states. It has developed a single market through a standardized system of laws that apply in all states, ensuring the free movement of people, goods, services, and capital. It maintains common policies on trade, agriculture, fisheries, and regional development. The EU fosters sustainable development supposedly based on balanced economic growth and price stability, a highly competitive market with full employment and social progress. It seeks to combat social exclusion and discrimination, promote scientific and technological progress, and solidarity among EU countries as well as respecting the rich cultural and linguistic diversity.

However, the EU does not have one government but twenty-seven different States and twenty-four official languages. This means twenty-seven different cultures with different mentalities. In order to resolve the complexity of regulations of twenty-seven States these not only must be analysed as for the common efficiency but also the adaption must be agreed on within a certain time. In the past we have seen how “realistic” this is, discussing minor issues as food import and export, quality standards. In Europe we have innovation and digitalisation gaps creating difficulties and non-compatibility within Europe and in competition with China and the US. We do have a fragmented internal market, there are still barriers to trade and investment within the EU due to the national regulations and laws. Brexit has introduced trade barriers and uncertainties, impacting European industries that were integrated across the UK – EU divide. This has had implications for supply chains, investment decisions, and market access.

Imagine how complex the implementation of the Green Deal will be. Even agreeing on all factors, the realistic execution in a highly regulated and non-conform market seems impossible.

The industry needs a faster solution. A less regulated procedure appealing to common sense and responsibility of every single person and company involved. Changes of regulations and laws take time. Europe should not want to compete on a quantitative scale with China and the US. A qualitative definition of Europe and a united workforce supporting the goals is crucial to success. This means Europe has to work on the way it sees itself, not imposed from above but grown from the inside. It has to further enhance green thought leadership and make it sustainable but also to make it feasible and profitable unless otherwise decided. The KPIs may have to be revised.

Europe needs to educate, engage, and retain skilled people sharing a common identity.

 Morgan Philips – Making Success Stories Happen

by Gabriele Kamps, PR & Communications Manager at Morgan Philips 

 

 

 

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