1,000 entrepreneurs protest: “We can’t afford to pay for the green transition”

CLIMATE CHANGE

All the regulations and detailed controls that have followed in the wake of the green transition threaten the survival of European industry, warn 1,000 business leaders. “It is not possible to just add costs,” says Adam Kanne at the chemical group Perstorp to TN.

When Ursula von der Leyen took office as president of the European Commission in 2019, she launched the green deal (the green deal) with the goal of the Union reaching net zero emissions by 2050. It was the EU’s “man on the moon moment”, said von der Leyen. An initiative that has since been followed by a comprehensive legislative package that is now being implemented.

There has been concern for some time that all the regulation and the detailed governance that came with the green legislative packages threatens the competitiveness of the Union. Swedish Business last year drew attention to the development with the “Europe Unlocked” initiative, where the goal is to strengthen the internal market and get the next EU Commission to focus more on growth and competitiveness.

“The EU’s competitiveness has been falling for twenty years. We need to do more to increase our growth, invest more in innovation, new technologies and research and development. We need to keep competitiveness in focus,” stated Jacob Wallenberg, chairman of Swedish Business Confederation, in connection with the initiative being presented.

Now comes “the industrial deal”

At the same time, competition is increasing for the investments that are crucial for the green transition to be implemented. China’s state-controlled economy could push up the prices of goods such as solar panels and out-compete European manufacturers, and the US has launched its giant IRA subsidy package for green investments.

Now the heavy energy-intensive European industry is sounding the alarm that all the regulations together with the detailed control of technology choices and subsidies for certain technologies threaten the Union’s competitiveness.

That is the main message from the approximately 1,000 business leaders who signed the so-called Antwerp Declaration, or “the industrial deal”, which was recently presented to the President of the European Commission, Ursula von der Leyen. Now the next commission elected in June this year must put European industry in the driver’s seat, say the signatories, who are found in Europe’s largest companies, in 15 different industry organizations and in several trade unions. Otherwise, it will not be possible to achieve the Commission’s climate goals under current conditions without damaging the EU’s competitiveness and hampering growth.

It’s basically about the companies’ ability to be able to pay for all green investments, says Adam Kanne who is responsible for public affairs at the chemical group Perstorp. He has also been involved in developing the content of the declaration. One conclusion is that EU policy in recent years has been very cost-driven for European companies.

– It is not possible to just add costs and detailed management and then believe that the companies will be able to carry out the changeover and at the same time be competitive. We face tougher competition on the world market.

– A main idea in the declaration, and the industrial provision that we want to complement the green one, is that in order for us to be able to pay for all the investments required, we must be competitive and generate profits, continues Adam Kanne.

One example is Germany, where industrial production fell for the seventh month in a row when the latest statistics were presented. The worst figure in three decades.

Energy supply crucial

At the top of the Antwerp Declaration’s list of the measures that the next EU Commission must tackle is the task of securing access to fossil-free energy and reducing all the onerous detailed regulations that companies struggle with.

– There are a number of common denominators that we have been able to gather around in the declaration. We need to get the right conditions to work efficiently, not detailed regulations and subsidies. For the forestry industry and SCA, an expanded infrastructure and a reliable and cheap energy supply are absolutely crucial for us to be able to be competitive and produce the products of the future on a large scale, for example renewable fuels, says Ulf Larsson, CEO of the forestry group SCA.

TN recently wrote about SCA’s concerns about the deteriorating rail infrastructure on which the company depends.

“We are already seeing major consequences. It can’t go on like this. The railway has been allowed to fall into disrepair for 40 years, but now it’s no longer possible,” said Magnus Svensson, head of purchasing and logistics at SCA to TN.

Adam Kanne states that the availability of competitive and stable energy is crucial.

– The US and China have cheaper energy than Europe. We have other competitive advantages, but the energy issue is central.

And in that context, new nuclear power is an important piece of the puzzle.

– As it has looked so far, the EU has steered towards renewable energy. It is not an effective adjustment if you exclude other forces that also create stability and planability. We need renewable energy in combination with nuclear power. In addition to that, we must quickly expand the networks, says Adam Kanne.

Do you see the Antwerp Declaration as a distress call from the companies?

– Now over a thousand large European companies have signed, so yes. Europe must become more competitive. It is a fact and provides the conditions for both change and prosperity. We need a regulatory framework that promotes innovation and development and not the over-regulation that has been the hallmark of the current commission.

Ulf Larsson agrees.

– Of course, it is better if we are given the right and best conditions to be able to conduct our business instead of regulations and subsidized solutions. Then, of course, there may be a need for political instruments that lay out a fixed road map going forward that companies can rely on and adapt to.

– This also applies to the energy issue. We must have access to fossil-free energy quickly, and then wind power is the fastest to expand. It must somehow be possible to give the right incentives to the municipalities so that wind power is accepted. Then we could solve this quickly, continues Ulf Larsson.

Adam Kanne points out that 2019, the year the green given was presented, is now far behind us and that the conditions and circumstances have changed completely in the five years.

First, covid-19 hit the world. Then Russia attacked Ukraine, resulting in a serious energy crisis. The United States has hooked the green race with “the inflation reduction act” and we cannot rule out that Donald Trump will be the next president of the United States, he states.

– So much has happened and we have a completely new geopolitical situation. The abundance we saw just five years ago is gone. Now we must become more realistic in our assessments of how the green deal should be implemented.

– At the same time, the costs are becoming more visible now that all legislation must be implemented and we see the consequences. It may turn out that the first plans need to be adjusted and become more efficient, continues Adam Kanne.

For the Swedish forestry industry, the EU’s green deal has been a challenge. When TN interviewed Skogsindustrienarna’s CEO Viveka Beckeman recently, she stated that she could not really see the “deal” in the various proposals for the forest that were presented. They basically mean that the EU wants a larger share of the Swedish forest to be responsible for sequestering carbon dioxide.

“It was rather a big focus on conservation, which of course goes against Swedish forestry and the forest industry,” said Viveka Beckeman.

Ulf Larsson agrees. He believes that for a company like SCA it is again about being given the right conditions.

– If we are to be part of the green transition, we must have access to forest raw materials to be able to continue developing the materials and fuels that will replace the fossil alternatives. The EU should instead promote forest growth and the raw material that can contribute to it.