No industry support without a commitment to cleaner production

Climate action

While there is strong claimed support for a ‘green’ recovery from the European Commission, the European Parliament and key member states like Germany, the devil is in the detail, write Doreen Fedrigo and Camille Maury.

This op-ed was originally published by Euractiv on 18 May 2020.

Doreen Fedrigo is Industrial Transformation Policy Coordinator at Climate Action Network (CAN) Europe. Camille Maury is Policy Officer at the WWF’s European Policy Office.

The level of political importance given to an issue can be assessed according to what level of funding is allocated to it.

The EU is aiming to mobilise trillions of euros to help the economic recovery from COVID-19. These recovery trillions must ensure some of Europe’s most polluting sectors – the energy-intensive industries such as cement, chemicals and steel – move to sustainable, climate-neutral production.

While there is strong claimed support for such a ‘green’ recovery from the European Commission, European Parliament and key member states like Germany, the devil is in the detail. This will be revealed in the coming days or weeks when the Commission publishes its Recovery Plan.

We already know that a crucial element of the Plan will be funding allocated to EU industry.

Commissioners Mariya Gabriel (Innovation, Research, Culture, Education and Youth) and Thierry Breton (Internal Market) recently told the European Parliament’s Committee for industry, research and energy that 10% of the Recovery Plan (€1,5tn at the time) will be earmarked for energy-intensive industries such as the cement, chemicals and steel sectors. Breton said these sectors form the 4th hardest hit industrial ‘ecosystem’, representing 6.5 million jobs.

Cement, steel and chemical sectors are not only intensive in their energy use. They also have a massive impact on nature at every part of the processes involved, from mining to production, and even on to the end of life of the goods made with them.

Recovery money – which should include both public funds and private investment – must therefore not be to return to pre-COVID damaging and polluting situations. We need to think of it as helping a transformation to a cleaner, healthier and stronger industry, making net zero carbon and circular products in cleaner production processes, and providing sustainable jobs – as pushed in both the Industrial Strategy and the Circular Economy Action Plan.

Instead it must require industry to make considerable leaps along sustainable pathways. Decisions taken today will have impacts on what is possible as far away as 2040. Transformation should extend to products, processes and business models to align with environmental challenges, while also skilling and reskilling workers for the 21st century.

In order to achieve this, the EU must make funding to energy-intensive industries (particularly large industrial companies) conditional on their having a carbon-neutrality transition plan. It must also use the forthcoming EU ‘taxonomy’ – which will tackle greenwashing in the finance sector by making clear which investments are truly sustainable – to define what is funded and what is not. According to the taxonomy, fossil fuels are not a sustainable investment, and so they should certainly not be funded by recovery money.

To help smaller businesses, some of the funding and grants should be earmarked for small and medium enterprises working towards climate neutrality and circularity, under simpler conditions than for larger companies.

Lastly, funding to energy-intensive industries needs to be made conditional on immediate actions to improve sustainability and resilience. Concrete proposals are already outlined in the Master Plan of the High-Level Group on Energy-Intensive Industries and refit processes on REACH and other chemicals legislation.

For example, energy-intensive industries can develop new business models to answer the needs of the circular economy – such as through improving reusability and recyclability of products. Those commitments will help to build a path towards upcoming Sustainability Strategies for these sectors.

A successful recovery from the crises cannot be based on outdated, polluting pre-COVID economies. These conditions would help make Commissioner Gabriel’s job easier in future, particularly given her remit is not only Innovation and Research, but also Education and Youth.

Providing the EU’s youth with a healthy future on a healthy planet would be a transformation worth investing trillions in.