Empowering Europe’s Industrial Future: A Call to Action for the new European Commission

By Marco ten Bruggencate, President Europe, Middle East, Africa, and India at Dow

As I prepare to take over the leadership of Dow’s EMEAI region from my respected colleague and friend Neil Carr, I look forward to following up on his engagement to promote a policy environment that supports the investments needed to achieve Europe's ambitious sustainability targets. The challenges around European competitiveness, the critical need for a more pragmatic regulatory framework, and the insufficiently realized power of the Single Market dominate many of our transition conversations.

With the recent European Parliament elections, European voters have heralded the beginning of a new legislative mandate for the EU. The next weeks and months are a crucial time because we will see the negotiations unfold that will determine the policy priorities for the next five years. Since the mandate of the next European Commission runs until 2029, this is the last chance to ensure that the EU’s future direction empowers European industry to deliver the transformation the Green Deal has sought to unleash by 2030.

The Green Deal was the central theme of the EU in the past five years, and we wholeheartedly support its climate and circularity objectives, which are in line with Dow’s global sustainability targets. But economic conditions have changed and if these objectives are to be met, the Green Deal needs to be complemented by policies that restore Europe’s industrial competitiveness in such a way that corporate investments in sustainability projects find a business case in Europe. This is the central challenge of Europe’s sustainability transformation, and despite the ambitions, Europe is currently being overtaken by other regions who are more successful at attracting transformational investments. There’s a real risk that Europe will fail in its ambition of becoming the world’s first carbon neutral continent and while trying, see a level of deindustrialization that will make it become more dependent on other parts of the world. This should be worrying to EU policymakers.

This is puzzling, for Europe has many of the elements needed for competing successfully in the global economy. The EU Single Market is the basis for the competitiveness of our European operations. Many aspects of the Single Market work well, including the harmonization of regulation (REACH, the chemicals regulation, is a good example). But the Single Market is not yet sufficiently leveraged to scale up circularity. For example, despite frantic legislative activity in the last years, we are still waiting for clarity on mass balance accounting for the recycling of strictly regulated food contact packaging. Without this clarity, it is impossible to define a business case for investments that are needed to make the European economy more circular.

Dow is deeply invested in Europe, where we make many of the materials that enable the transformation. One of many examples are silicones, which play a crucial role in electric vehicle batteries. But we will also need to transform our own business. One angle is circularity, with our countless collaborations with brand manufacturers in the fast-moving consumer goods sector to innovate plastic packaging to make it recyclable and ensure plastic becomes a valuable secondary resource at the end of life, and our partnerships for scaling both mechanical and chemical recycling technologies to enable greater supply of circular plastics. Another angle is bringing our production processes to net zero. This requires enormous investments, which reinforces my earlier point on the need to find a positive business case. Regulation can help or hinder the transformation because regulatory requirements can increase or reduce the costs of the transformation. Surprisingly, multiple Green Deal regulations have made the transformation in the chemical industry more costly. Examples include the decision to phase out free ETS allowances for hydrogen production and also the stringent requirements around the use and production of green hydrogen.

This is what needs to be rectified. We urgently need an enabling regulatory framework that provides predictability, does not unnecessarily make the transition more costly, and helps us build and derisk the business case of investments into innovation and sustainability. With the Antwerp Declaration, a broad cross-section of Europe’s industrial sector has presented a comprehensive set of priorities that address this. It should be a guide for all political decision-makers now negotiating the priorities for the next five years to ensure that Europe’s industrial landscape regains competitiveness and resilience while successfully transforming to carbon neutrality and circularity.

Specifically, it calls for[1]:

·?????? Streamlining legislation and simplifying state aid: By making legislation more pragmatic and reducing technical detail – frequently the cause of the much-cited bureaucratic hurdles – we can foster an environment conducive to transformational investment.

·?????? Ensuring competitive costs for low-carbon energy: Adequate and competitively priced infrastructure is crucial to providing abundant and affordable low-carbon energy, which is the backbone of the industrial transformation.

·?????? Focusing on essential infrastructure: Developing world-class energy, CCUS (carbon capture, utilization, and storage), and recycling infrastructures is imperative. Removing permitting obstacles and investing in skilled workforce programs will facilitate this transformation.

·?????? Increasing raw materials security: Scaling up sustainable processing and recycling capacities, coupled with new global partnerships, will enhance Europe’s self-sufficiency and security of critical raw materials.

·?????? Boosting demand for sustainable products: Initiatives are needed to drive demand for low-carbon and circular products.

·?????? Leveraging and improving the Single Market: Addressing fragmentation and creating a cohesive market for waste and recycled materials, as well as a true European energy market, will bolster the integrated cross-border value chains essential for green industrial competitiveness.

·?????? Fostering innovation: A smarter innovation framework that promotes high-quality science, digitalization, and protects intellectual property rights is crucial for maintaining Europe’s competitive edge.

·?????? Promoting a new spirit of law-making: Legislation should incentivize investments in clean technologies and be based on robust data and scientific evidence. A Competitiveness Check for new policies could be useful to achieve this.

·?????? Ensuring effective policy implementation: Appoint a senior Commissioner, e.g. a First Vice-President, responsible for ensuring competitive investment conditions with streamlined legislation.

The Antwerp Declaration underscores that only with a competitive industrial foundation and enhanced social dialogue can we ensure a just transition towards a green economy. As we move forward, it is imperative that the EU Member States appoint a strong European Commission and provide a clear political agenda that unambiguously seeks to improve conditions for investments into the transformation of the European economy.

Once in office, the Commission must act with urgency to implement these measures. 2030 is only one EU policy cycle away. It’s the last chance to enable European industry to find competitive business cases to invest into turning the Green Deal into reality

[1] Read the full text of “The Antwerp Declaration for a European Industrial Deal” here: https://antwerp-declaration.eu

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