Energy-intensive industries, including chemicals, play a critical role in mitigating strategic dependencies in Europe, from food security to defence. While these industries have the track record of being leaders in innovation, the highly awaited report by former President of the European Central Bank, Mario Draghi, points at an erosion of competitiveness.
The decline in the competitiveness of the energy-intensive industries is expressed through reduced domestic production and increasing reliance on imports. The overarching causes of this downturn include the rising energy prices and the costs associated with decarbonisation, in addition to an unrealised potential for circularity. The complex regulatory environment in the EU is also featured as a key consideration reiterating lengthy permitting procedures and lack of harmonised implementation of legislation across Member States.
The much discussed on-going group restriction of per- and polyfluoroalkyl substances (PFAS) is featured in the report, echoing industry concerns about the enforceability of such measures, especially in the context of imported products. Within the context of clean tech, the Draghi report points at uncertainties for substances needed in the manufacturing of technologies, such as batteries and electrolysers, which currently lack alternatives. This also largely aligns with the sentiment shared by industry stakeholders in the public consultation for the PFAS restriction proposal.
Centring back to Draghi’s vision for the future of the energy-intensive industries, the report recommends 11 measures, among which:
- Streamline and improve the regulatory and financing environment: Increase harmonisation across policy areas, accelerate permitting procedures, and strengthen funding opportunities.
- Address energy and critical raw materials: Facilitate transitional access to competitive natural gas and the access to decarbonised energy. Improve the recycling of raw materials and strengthen the Single Market for secondary materials.
- Refine the Carbon Border Adjustment Mechanism (CBAM), where appropriate: For example, introduce measures to streamline reporting in order to reduce administrative burdens.
Draghi’s recommendations are in the spirit of industry asks, such as those under the Antwerp Declaration. In addition, the sentiment on the complexity of the chemicals regulatory framework and specifically the PFAS restriction process are in line with the expected shift towards more pragmatic regulation of substances. While the report validated the industry concerns, the big question now is how the recommendations will be implemented in practice. Of particular interest for those heavily impacted by chemical policy is whether we will see traces of Draghi’s vision in the recently announced Chemical Industry Package, under which President of the European Commission, Ursula von der Leyen, promises simplification of the key chemical legislation REACH and the much needed clarity on the PFAS restriction.
Kristin Tsenkova, Public Affairs Consultant