Industrial competitiveness, the mantra of a von der Leyen second term?

As she closes out her first term, Ursula von der Leyen’s Commission has put forward several initiatives designed to address the concerns of European industry, but what effect will they have?

Unveiling the European Commission’s recommendation for a 90% emissions reduction target for 2040 last month, Vice President Maros Šefčovič signalled a new focus for the EU executive. The Green Deal now needs to become an “industrial decarbonisation deal,” he told reporters, with an emphasis on engaging more with industry competitiveness concerns.

“The risk of deindustrialisation and social tension is very real,” he said. “For us, Europe’s industrial leadership and socially just, green transition are not only two sides of the same coin, but they are imperatives.”

Industrial competitiveness has come into sharp focus in Brussels over the past year, with several new initiatives to better connect it to the European Green Deal. These have included the Net-Zero Industry Act, The Green Deal Industrial Plan, and the Critical Raw Materials Act.

Antwerp Declaration

The Commission, along with the Belgian presidency of the Council of the EU, convened an industry summit in Antwerp last month which presented the Antwerp Declaration for a European Industrial Deal, calling on the EU to “put the Industrial Deal at the core of the new European Strategic Agenda for 2024-2029”.

The declaration presented by Commission President Ursula von der Leyen, was signed by 527 companies and 171 industry associations and unions. It contains a ten-point plan for changing the Green Deal including calling for an “Omnibus proposal to take corrective measures on all relevant existing EU regulation” that should be the first piece of legislation in a second von der Leyen term.

Šefčovič has insisted that a reevaluation of the Green Deal does not mean watering it down, but rather assessing how it is working so far and adjusting it with Europe’s industrial competitiveness in mind – particularly now that the various pieces of legislation in the Green Deal’s Fit for 55 package are being transposed into national law across the European Union.

Incentivising business

But the big question is how EU legislation can best incentivise businesses to reduce emissions even as they face stiff competition from other parts of the world with less stringent climate legislation such as China, the United States and India.

Šefčovič has outlined four pillars on which this new strategy will rest: a “predictable and simplified regulatory environment”, “speedy and efficient access to funds”, a focus on skills and education in new technologies through vocational training and universities, and “open trade for resilient supply chains.”

Answering the question of how to incentivise industry emissions reduction will largely rest on the Net-Zero Industry Act, which was proposed by the Commission last month, and on which a provisional agreement was reached between the European Parliament and Council last month.

The regulation aims to boost the industrial deployment of net-zero technologies needed to achieve the EU’s climate goals, using the strength of the single market to reinforce Europe’s leadership in industrial green technologies. Under the agreement, there will be a single list of net-zero technologies, with criteria for selecting strategic projects in those technologies that will contribute better to decarbonisation.

The act is just one part of the Green Deal Industrial Plan, which was put forward in February 2023 to “provide a more supportive environment for the scaling up of the EU’s manufacturing capacity for the net-zero technologies and products required to meet Europe’s ambitious climate targets,” in the Commission’s words.

Critical raw materials

Another important piece of legislation that is part of this strategy is the Critical Raw Materials Act, which was also put forward in March of last year and adopted in December. It aims to increase and diversify the EU’s critical raw materials supply, strengthen circularity such as recycling and support research and innovation on resource efficiency and the development of substitutes. The materials included on the critical list include lithium, magnesium, cobalt, copper and nickel.

This act has been particularly important to the metals sector. Guy Thiran, Director General of European metals association Eurometaux, noted at the time of the proposal’s unveiling that “Europe must act urgently to avoid unhealthy dependencies or supply bottlenecks.” He noted that almost all of the technologies prioritised in the Net Zero Industry Act, such as wind turbines, solar PV systems, batteries, grid technologies, and hydrogen electrolysers, require an increased supply of metals and minerals.

The EU is facing looming metals supply bottlenecks if it doesn’t take urgent action to maintain and expand its metal supply chains, according to a 2022 study by KU Leuven commissioned by Eurometaux. “Investing companies need guarantees of EU and national support urgently, so they can commit to Europe amidst counteroffers from the US and other regions.”

CBAM and global competitiveness

The Commission has also tried to address these global competitiveness concerns with the Carbon Border Adjustment Mechanism, which will start adding a levy to products imported into the EU from countries with lax climate legislation from 2026.

There have already been calls from industry to expand the CBAMs protections in the next term. For instance, this month the Czech Environment Minister told Euractiv that it should be expanded to cover more products such as building or textile materials. The products currently included are iron, steel, cement, fertilisers, aluminium, electricity and hydrogen,

There are still many unknowns for the next EU term, such as the political composition of the 2024-2029 parliament and whether President von der Leyen will be appointed to a second term or will be someone new. Either way, the key pieces of legislation put forward at the end of von der Leyen’s first term signal a focus on industrial competitiveness is coming.

Green groups have already said they are keen to make sure that this new focus doesn’t lead to a dismantling of what has already been achieved with the Green Deal. Industry groups say it isn’t about watering down but rather fine-tuning the Green Deal to make it go hand-in-hand with industry concerns around global competitiveness.

[By Dave Keating I Edited by Brian Maguire | Euractiv’s Advocacy Lab ]

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