22 June 2021

The EU’s updated industrial strategy will not green industries ‘top to bottom’ – Will comprehensive links with product policy and standards still be missing in 2030?

By Michael Neaves

The updated industrial strategy presented by the European Commission last month lacks clear and sufficient links with the upcoming EU policies for sustainable products. To meet the 2050 net zero targets and make sustainable products the norm, the Commission needs to develop a bolder and more coherent package of measures across its Industrial Strategy and the Sustainable Product Initiative, and take a better approach to the use of standards in this context.

In May 2021, the European Commission updated the EU Industrial Strategy adopted a year earlier. The update takes stock of the past year’s progress and adds definition to the implementation of the strategy. Nonetheless, the updated strategy still fails to deliver a comprehensive package of policy measures for an industrial transition towards climate neutrality. Missing in the EU’s updated recipe: making low-carbon markets using EU product requirements and standards.

 

Industrial and product policies – the two pillars of a sustainable single market

The green and digital transitions, competitive sustainability, and strategic autonomy all feature strongly in the updated Commission’s industrial strategy. It promises help in achieving a green recovery and support long-term EU resilience against future health and climate threats.

However, this recent update focuses on short-term economic performance and leadership of EU market actors according to global norms, measuring impact in terms of productivity, international price competitiveness, and investment – but forgets long-term environmental performance indicators, for example one focusing on decarbonisation.

The EU has a strong history of product legislation but has, regrettably, chosen to place more emphasis on revitalising fading business models, pursuing global competitiveness and tinkering with trade dynamics, rather than creating demand for industrial products that are lower carbon.

Producers crave market demand for sometimes more costly low-impact materials, but policymakers have chosen not to flick the switch, leaving industry innovators in the dark as to when, or even if, their competitive and sustainable solutions will have a market.

This threatens to undermine a ‘green’ post-pandemic recovery for industrial value chains. The EU’s strategy prioritises the preservation of traditional definitions of a successful economy — one focused on profits — as opposed to environmental performance as a form of competitiveness.

The Sustainable Product Policy Initiative, which the Commission is now preparing, must quickly nudge product groups reliant on high-impact intermediary materials towards lower-carbon alternatives. For example, construction, automotive and domestic appliances still rely on coal-based steel production, while electric-based production of 100% recycled products remains uncompetitive. It is time to reorient the market towards low-carbon solutions.

Product requirements at end-product, intermediary and basic material level can all contribute to this process, which will, in turn, offer economic rewards to those leading the way.

 

Gearing EU standards for industrial transformation

The updated EU industrial strategy refers to standards over 20 times in both political and technical terms. However, likely through fear of creating barriers to global trade, the strategy fails to highlight any minimum requirements on environmental performance.

Regulatory requirements are key tools to shape markets. For example, they could be used to establish a maximum CO2 footprint for different steel and cement products. However, requirements often rely on technical standards to support compliance – to make environmental rules work in practice, we need ambitious and robust standards. Not only that, but forward-looking standards can also act as enablers for the uptake of low carbon alternatives instead of posing barriers to them.

In the Commission’s industrial strategy, references to standards largely focus on EU leadership and competitiveness, but detail is lacking in terms of how regulatory requirements and standards should improve environmental sustainability. This begs the question: Is the European Commission prepared to set environmentally ambitious standards for materials and products at any point in the future in order to seize this leadership?

The announcement of the EU’s updated industrial strategy diverts attention from the lack of real ambition to become a leader by setting an example through Single Market legislation and standards. The EU is one of the largest economies in the world and is therefore an attractive market to do business with. With the right policy conditions, standards can be a catalyst for scaling up more sustainable products and practices.

For example, the EU could introduce mandatory, progressive environmental performance requirements for each material by common intermediary product forms or categories, based on common carbon accounting rules for intermediary products. This combination could set the basis for Paris compliant market regulation, and competition based on sustainability. Instead, polluters can pay their way onto the market. Unfortunately, this is more of a nudge than transformative policy at this critical moment.

 

Bridge gaps between industrial policies and product standards to boost green industry

To make sustainable products the norm, decarbonise industry and ensure EU sustainability policies and standards can play a leadership role. The Commission needs to develop a bolder and coherent package of measures across three flagship policies: the EU’s Industrial Strategy, the Sustainable Product Initiative, and the upcoming Standardisation Strategy.

Already this year, as decarbonisation pathways of energy-intensive industries are drawn up, policy should put forward clear actions linked with the development of the sustainable product policy framework to deliver on EU climate goals short-term, and long-term. To this end, alongside the ‘Fit for 55’ package, the European Commission should develop a clear 2030 strategy for transformative decarbonisation of industrial ecosystems – from end-product upstream to productions of basic materials. We must tackle the environmental impacts of a wide range of products using industrial materials, starting with steel, cement, and chemicals.

If we miss this opportunity, we may find ourselves in the exact same spot in 2030, after failing to meet our 55% target, at which point it will be déjà vu, and potentially game over for the environment.

ECOS is co-funded by the European Commission and EFTA

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