INSIGHT: Chemical and energy intensive industries seek a ‘reboot’ of EU industrial policy

Nigel Davis

20-Feb-2024

LONDON (ICIS)–Basic industry and trade unions understandably are increasingly and deeply concerned about Europe’s industrial landscape.

The EU has an industrial policy, and it is enshrined in the ‘Green Deal’ and other objectives outlined by Brussels – often at very great length. But ambition from within the bloc to support industry has by no means been met with effective action either at the European or the member state level.

Businesses were telling Brussels earlier this month that not only has a fragmented regulatory environment made it less attractive for companies to invest in the EU, but a lack of ambition for the Single Market has stifled business opportunity.

On Tuesday (20 February) chemical industry leaders and trade union representatives met European Commission President, Ursula von der Leyen and Belgium’s Prime Minister, Alexander de Croo at the BASF site in Antwerp to press home their concerns and launch the ‘Antwerp Declaration for a European Industrial Deal”.

The companies and organisations represented at the event support a European Industrial Deal to complement the Green Deal, more effectively putting industry at the forefront of the climate agenda. “There is an urgent need for clarity, predictability and confidence in Europe and its industrial policy,” they say.

In the midst of Europe’s economic slump and energy crisis, the lack of industrial ambition within the EU’s framework policies has helped shift companies’ strategic thinking. It has put brakes on investment and forced multinationals to look elsewhere. Companies may not necessarily want to shift further from the European market but the reality is that they are.

INEOS chairman and majority owner, Jim Ratcliffe, who was in Antwerp, said in a letter to von der Leyen that Europe is “sleepwalking towards offshoring its industry, jobs, investments, and emissions”.

The European chemicals sector struggles to compete with other markets, he added. Investment has been driven away by carbon taxes while the US has used a carrot and stick approach to improve its carbon footprint.

There will be little left of the industry if the European government does not address the high energy costs, carbon taxes and lack of renewal that impacts the sector, Ratcliffe said.

INEOS is investing heavily in its Project One cracker project in Antwerp but has faced environmental obstacles brought to court. Ratcliffe suggested that they demonstrate the flawed European approach.

The EU has pushed its green, low carbon agenda hard and sought to carry the energy intensive industries with it but confusion and stasis on the energy front, including the inability to push harder and faster for local and regional renewable energy capabilities is a major headache for producers.

To meet climate neutrality by 2050, and even earlier targets, investment in renewables will have to increase markedly. Permitting of energy projects will have to accelerate.

Chemical companies and those in other energy-intensive sectors are expected to invest in lower-carbon manufacturing without the assurance that power will be available for their facilities.

The declaration, signed by more than 70 business leaders wants member state governments and the next European Commission and Parliament to put an Industrial Deal at the core of the 2024-29 European strategic agenda. It makes suggestions on the main thrust of the deal. The signatories are looking for a “reboot” of industrial investment in Europe.

“Basic industries in Europe are grappling with historical challenges: demand is declining, investments in the continent are stalling, production has dropped significantly, and sites are threatened,” said BASF chief Martin Brudermuller. “We want to drive the transformation of our companies.”

Insight by Nigel Davis

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