EU needs a more comprehensive industrial plan to secure competitiveness in the net zero age

16 March 2023

The European Commission today present...

The European Commission today presented the Net Zero Industry Act and European Critical Raw Materials Act, part of its Green Deal Industrial Plan to ensure Europe leads the way in the global transformation to a net-zero industrial age. These form part of a broader competitiveness package including a new long term competitiveness strategy and a proposed Electricity Market Design reform, presented on 14 March.

Orgalim is deeply concerned about the serious risk of deindustrialisation and loss of competitiveness that Europe is facing, and we therefore welcome the political attention on strengthening the EU’s industrial base. Measures to support value chains for manufacturing of renewable energy technologies, as proposed in the Net Zero Industry Act, are much needed. And our industries have long flagged the difficulties in accessing a stable and reliable supply of critical raw materials which the European Critical Raw Materials Act aims to address.  

The proposed measures involve a far-reaching shift towards public sector intervention in the market, which will materially reshape European industries and set a precedent for other parts of the economy. To balance the risks inherent in this approach and succeed in reaching net zero while preserving Europe’s competitiveness, a more comprehensive approach is needed, says Malte Lohan, Orgalim’s Director General.  

Firstly, the shift away from fossil fuels must be complemented by a far greater emphasis on reducing energy demand. Overall, more than a third of decarbonisation needs to come from efficiency gains by 2040, according to the IEA. The required technologies, from electrification to sector coupling and reusing wasted energy, are widely available and are areas where European companies are particularly strong. "We have to start looking at energy efficiency as a major clean energy source and treat it with the same urgency as the uptake of renewables," he says. 

  To reach net zero, we have to start looking at energy efficiency as a major clean energy source and treat it with the same urgency as the uptake of renewables. 

Malte Lohan

Secondly, retaining Europe’s competitiveness while reaching net zero requires an acceleration of the advanced manufacturing technologies and processes – from digitalisation to additive manufacturing and automation – that are preconditions for raising productivity. The same goes for waste collection, sorting and recycling technologies that will be essential to meet Europe's growing demand for lithium, rare earth elements and key industrial metals in the coming decades. Industrial metals are as vital to clean tech manufacturing as the rare earth elements currently identified in the European Critical Raw Materials Act and should therefore also be treated as such. The European Commission's Industrial Forum will soon publish a report, developed under Orgalim’s curatorship, with a comprehensive set of policy recommendations for accelerating the deployment of advanced manufacturing technologies.  

Last but certainly not least, clean tech permitting is only the tip of the iceberg when it comes to the regulatory barriers facing European manufacturing. A much greater threat to Europe’s industrial competitiveness is the rapidly expanding cumulative burden of disproportionate and badly designed legislation that manufacturing companies are sinking under, Daniel Wennick, Orgalim's Policy Director emphasises. "An effective competitiveness strategy must improve the overall business and investment climate by addressing the cumulative regulatory burden, while implementing a comprehensive competitiveness check on all future legislation," he says.  

  An effective competitiveness strategy must improve the overall business and investment climate by addressing the cumulative regulatory burden, while implementing a comprehensive competitiveness check on all future legislation. 

Daniel Wennick

Our industries look forward to contributing to the efforts to deliver the Green Deal Industrial Plan and to engaging actively to accelerate the transition to a net zero industry age.