DEEP DIVE: EU Industry Leaders Seek Relief from the Pressures of the Green Deal

(Editor’s Note: 3E is expanding news coverage to provide customers with insights into topics that enable a safer, more sustainable world by protecting people, safeguarding products, and helping businesses grow. DEEP DIVE articles, produced by reporters, feature interviews with subject matter experts and influencers, as well as exclusive analysis provided by 3E researchers and consultants.)

During a private European Industry Summit held at BASF’s Antwerp, Belgium site on 20 February 2024, 73 corporate leaders representing 18 industry sectors and 7.8 million workers unveiled “The Antwerp Declaration for a European Industrial Deal.” According to them, the climate goals of the EU Green Deal and the regulations and requirements associated with it are placing an additional burden on many of Europe’s already stressed industries.

The declaration, which has a total of 108 signatories including industry and trade associations, was presented to Belgian Prime Minister Alexander De Croo and European Commission President Ursula von der Leyen. It underscores the commitment of industry to Europe and its transformation while offering a list of 10 urgent industry needs “to make Europe competitive, resilient, and sustainable in the face of dire economic conditions,” according to a press release from the European Chemical Industry Council (CEFIC).

“The chemical industry is at the heart of 96% of products we use daily,” LyondellBasell Industries CEO Peter Vanacker wrote in a LinkedIn post. “Without us, it will simply be impossible to future-proof Europe and meet the climate goals of the Paris Agreement.”

“Europe has a unique opportunity to be an innovative leader in the circular economy but we need pragmatic, enabling regulation that includes mass balancing,” Vanacker added. “We, as industry leaders, are convinced that this Industrial Deal needs to be at the core of the New European Strategic Agenda.”

As stated in the declaration, to meet climate neutrality by 2050 and the recently communicated 2040 target, “Europe’s electricity production will need to multiply, and industry investments will need to be a factor six higher than the previous decade. This enormous challenge comes just as both large companies and SMEs face the most severe economic downturn in a decade, demand is falling, production costs increase, and investments move to other regions.”

According to the European non-ferrous metals association Eurometaux, “the Antwerp Declaration outlines the need for urgent actions to ensure Europe’s industries remain competitive, resilient, and sustainable amidst economic challenges.”

Deputy Chairman, Mikael Staffas, President & CEO at Boliden, stressed the need to put industrial competitiveness in the center to make the green transition possible, noting that “improved raw material security, improved infrastructure, competitive prices for energy, and a new spirit of law-making will not only benefit industry, it will benefit all of Europe.”

Historic Challenges Facing Industry

“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 CEFIC President Martin Brudermüller. “We want to drive the transformation of our companies. The Antwerp Declaration outlines a pathway ahead. By placing the European Industrial Deal at the forefront of Europe’s strategic agenda, the EU would pave the way for a resilient, competitive, and sustainable Europe. This is the only way to show the rest of the world that the Green Deal works for all.”

The U.S. economy, which benefits from financial support from the Inflation Reduction Act (IRA) and its ease of accessibility, a Chinese overcapacity, and increasing exports to Europe “all increase the pressure for the European industry even more. Our companies face this challenge every day. Sites are being closed, production halted, people let go. Europe needs a business case, urgently,” according to the declaration.

Industries in the EU have been struggling to switch their energy sources from cheap Russian gas to other low-price alternatives, said Grimanesa Till, Senior Chemical Business Advisor, Regulatory Consulting, 3E. Because of lessons learned from the Ukrainian war, the EU is also changing its approach to raw materials by diversifying its sources. But all of that takes time.

The market protection measures announced by the U.S. government, and the incentives they've promised to industry to invest in the United States, also are an important factor, she added.

“EU industry is destabilized and high energy prices force product cost increases. Some industries in Germany are announcing layoffs and are considering moving manufacturing to the United States,” said Till. “More restrictive environmental and regulatory measures in the EU are seen by industry as a burden that hinders their competitiveness.”

10 Actions That Would Help EU Industries Compete

The declaration outlines 10 actions, including integrating the EU Industrial Deal into the broader European Strategic Agenda, streamlining legislation, and simplifying the State Aid framework. The 10 actions are:

1. Put the Industrial Deal at the core of the new European Strategic Agenda for 2024–2029 — Calls for a comprehensive action plan to elevate competitiveness as a strategic priority and create the conditions for a stronger business case in Europe. The action plan needs to include actions to eliminate regulatory incoherence, conflicting objectives, unnecessary complexity in legislation, and overreporting.
2. Include a strong public funding chapter with a Clean Tech Deployment Fund — Would benefit energy-intensive industries and should be closely coordinated with a simplified state aid framework, while respecting the single market rules.
3. Make Europe a globally competitive provider of energy — Demands an EU energy strategy that has concrete actions that enable cross-border electrical power, grid expansion for hydrogen and other renewable and low-carbon molecules, and partnerships with resource-rich countries.
4. Focus on the infrastructure Europe needs — Target the Recovery and Resilience Facility and Structural and Regional Funds to integrate and build world-class EU energy, digital, CCUS (carbon capture, use, and storage), and recycling infrastructures as soon as possible.
5. Increase the EU’s raw materials security — Scale up domestic mining, sustainable processing, and recycling capacity for crucial raw materials, combined with new global partnerships. Scale up renewable carbon and circular carbon feedstocks, including the expansion and fast permitting of advanced chemical recycling technologies. Develop a Circular Carbon Strategy that incentivizes Carbon Capture and Use (CCU), biobased feedstocks, base metals, minerals, and advanced materials necessary to reach the aims of the Green Deal.
6. Boost demand for net-zero, low-carbon, and circular products — Empower consumers (businesses and private) to choose net-zero and circular products, based on transparent products and environmental carbon footprints.
7. Leverage, enforce, revive, and improve the single market — Create a single market for waste and recycled materials and a true European energy market. Improve enforcement of existing measures focusing on imports.
8. Make the innovation framework smarter — Foster high-quality science, technological innovation, and collaborative policies that prioritize openness and pragmatic outcomes while embracing innovative approaches like regulatory sandboxes. Promote digitalization as a prerequisite for groundbreaking research and to enhance efficiency.
9. Adopt a new spirit of lawmaking — Assess the cumulative impact of legislation. Prevent overreporting, ensure coherence, and integrate legislative proposals through a stronger Secretariat General and Regulatory Scrutiny Board, which should systematically apply a competitiveness check and a European innovation stress test against which each new legislation and policy initiative should be evaluated.
10. Ensure the structure allows European industries to achieve results — Install a first vice-president responsible for the delivery of the European Industrial Deal and for ensuring the seamless integration of legislation and alignment with the agenda of the next European Commission.

Trade association European Aluminum said it signed the Antwerp Declaration “to express support and the need for an Industrial Deal to complement the Green Deal. With high energy prices, an economic downturn, and strong global competitors, manufacturing sectors such as aluminum need an Industrial Deal that confronts these challenges and establishes a framework of confidence in Europe’s industrial future.”

Opposition From NGOs

Non-governmental groups like the European Environmental Bureau (EBB) are not fans of the Antwerp Declaration, however. “This event heightens an obvious concern: the prioritization of polluters’ profits over public health and the environment,” stated Tatiana Santos, Head of Chemicals at EEB. “Moreover, in an astonishing display of disregard for the welfare of citizens, this event is taking place in one of the most polluted regions in the world.”

The lack of transparency surrounding the European Industry Summit was called into question by some critics. On the day before the Antwerp Declaration was presented, Vicky Cann, researcher and campaigner at Corporate Europe Observatory, declared: “Tomorrow, polluters will have a good day at the expense of people and communities across Europe. This [event] held on the doorstep of some of Europe’s worst ‘forever chemicals’ contamination, is appalling. It’s time to hold corporations to account for their role in creating the toxic pollution crisis, not reward them. Tomorrow NGOs will demand an end to this kind of privileged access to decision-makers. It’s time for toxic-free politics.”

'Overregulation' in the EU?

Through the Antwerp Declaration, European industries are requesting that legislators protect the European single market and enforce regulations that already are in place. While they are being held to strict product safety and environmental standards, companies in other countries that are marketing goods to Europe are not.

For example, German consumer protection agencies point out that in Germany alone, 400,000 deliveries arrive from China via the online platform TEMU every day. Often, these goods are produced at a much lower cost and are flooding the market at lower prices. European industrial leaders are demanding a more level playing field.

Miriam Schoepel, Ph.D., Senior Chemical Regulatory Compliance Consultant at 3E, advises internal and external stakeholders on adapting to future demands based on ever-changing regulations. She has more than six years of experience managing projects related to regulatory concerns in sustainability and chemical compliance. “These companies are in direct competition with their non-EU counterparts while being, in their view, subject to much more stringent regulations (and) sometimes even what they refer to as ‘overregulation’ in the EU,” Schoepel said about the signatories of the Antwerp Declaration.

This overregulation combined with weakening chemical market conditions in general makes companies question their long-time investment in Europe. In October 2022, BASF, for example, announced it would “permanently” scale back its operations in Europe, citing rising energy costs and concerns about the regulatory climate. BASF and other companies continue to explore options outside of Europe, particularly given the strict regulations they are facing. From the point of view of European companies, additional regulations and stricter regulations — when existing regulations are not being enforced equally across the board — are perceived as unfair, said Schoepel.

“With the Antwerp declaration, they are saying to regulators, ‘You are making our lives even harder. Enforce what we already have in place and level the playing field for us with our international competitors,’” Schoepel said.

Interestingly, the Antwerp Declaration coincides with the legislative update of the Environmental Crime Directive. This update includes new rules aimed at protecting the environment in the EU through criminal law, which includes prosecuting breaches of EU chemical regulations, adding another layer of regulation for EU companies.

(About the author: Sandy Smith, Senior Reporter, 3E, is an award-winning newspaper reporter and business-to-business journalist who has spent more than 20 years researching and writing about EHS, regulatory compliance, and risk management and networking with EHS professionals. She is passionate about helping to build and maintain safe workplaces and promote workplace cultures that support EHS. She has presented at major conferences and has been interviewed about workplace safety and risk by The Wall Street Journal, CNN, and USA Today).