Strategy & Management

A Future-oriented Industrial Policy Strategy

07.07.2017 -

René van Sloten, CEFIC executive director industrial policy, explains why a holistic EU industrial policy strategy needs to be put in place – as called for by the Competitiveness Council at its meeting in May. In its conclusions of June 2017, the European Council underlines the essential role of industry as a major driver for growth, employment and innovation in Europe and calls for concrete action to ensure a strong and competitive industrial base of the Single Market.

Industrial policy has been mainstreamed into the EU strategic initiatives since the beginning of 2015. Why the need for a dedicated strategy?

R. van Sloten: It is essential that industrial competitiveness is taken into account in all policy areas. There has been much talk of mainstreaming, but this is still not completely engrained into the system. Nor is impact assessment operating fully satisfactorily at present, for example with respect to impacts on innovation. So there is still room for improvement, and we consider a dedicated industrial strategy to be vital.

We are pleased with the Member States’ call for a holistic approach. First and foremost, a change of mindset is needed: industry’s key role should be acknowledged. The transition towards a low carbon and circular economy requires a strong and competitive industry in Europe – we want to see the solutions being generated and developed in the EU, otherwise jobs would simply be exported outside the EU. The chemical industry can be a key contributor to energy transition, climate change mitigation and to other EU policy objectives, but only if the competitiveness of the EU chemicals sector is maintained.

The strategy is needed because investments in new production capacity are increasingly flowing to other parts of the world, leading to “investment leakage” in the chemicals sector. The EU’s share of global chemicals production is decreasing in several segments. This doesn’t mean our industry requires protection and blanket subsidies. It means our industry needs support in making the transition to the economy of tomorrow.

A positive development is that early this year 125 industry associations issued a joint declaration calling for an industrial policy strategy. This strong call was picked up by the Maltese presidency, culminating in the conclusions of the May Competitiveness Council. So, momentum has been building toward a clear call for the Commission to work on a strategy.

What precisely should that strategy entail?

R. van Sloten: High EU energy and feedstock costs, compared to other regions, are a particular barrier to investment. Help can come in the form of a fair ETS, fully functioning, well-connected liberalized gas and electricity markets and market development opportunities through building renovation measures.

We would like to see better, ‘cost-effective’ regulation that will reduce the regulatory burden, complexity and unpredictability, helping to maintain EU competitiveness and support investment and innovation. REACh is particularly onerous for the many chemical SMEs. Stricter enforcement of REACh legislation on imported articles would create a fairer level playing field. Trade openness will ensure an ambitious, balanced, free trade and investment agenda with key trading partners and open markets in general.

An innovation friendly environment should be created where the chemical industry can develop, test and apply new technologies. The ETS innovation fund provides an opportunity to assist the modernization of the asset base.

The digitalization of the chemical industry – Chemistry 4.0 – is equally important, with big data being able to improve manufacturing processes and lessen environmental impact.

Finally, the chemical industry can play an enabling role in the development of the circular economy if investments in innovation and economically viable solutions are encouraged.

We are ready to work with the Commission on developing and implementing this industry strategy and to help Europe to regain a best-in-class investment climate.