On 19th June 2024, PubAffairs Bruxelles hosted an afternoon debate addressing the question of how the upcoming EU legislative mandate can foster an industrial policy that merges competitiveness with sustainability. The panel featured Axel Minaire, Policy Advisor for the Renew Europe Group at the Committee on Industry, Research and Energy (ITRE), Stella Sassi, ITRE Policy Advisor for the Progressive Alliance of Socialists and Democrats (S&D) Group, Lars Ole Locke, ITRE Policy Advisor for the European People’s Party (EPP) Group, Cristian Bulumac, ITRE Policy Advisor for the Greens/European Free Alliance (Greens/EFA) Group and Maxim Raym, ITRE Policy Advisor for the European Conservatives and Reformists (ECR) Group.
Andreas Sauer, Policy Director at the BMW EU Corporate Representation in Brussels, delivered an introductory speech.
The debate was moderated by Rebecca Christie, Europe columnist for Reuters Breakingviews.
Rebecca Christie started the event by welcoming the audience and by introducing the discussion topics. She highlighted the significance of the discussion, noting that the panel consisted of representatives from the European Parliament’s political groups. She underscored the importance of the European Parliament’s work and highlighted the respective expertise of the policy advisors.
Following her introduction, Rebecca Christie invited Andreas Sauer to deliver an introductory speech. Mr Sauer welcomed the audience and explained that this debate was the second of a series on the question of competitiveness and sustainability of the European economy. He noted that the first event in April had featured academics, economists and institutional representatives, while this debate was intended to give to some policy advisors of the main political groups the opportunity to comment on the possible future direction of EU policies in light of the result of the European elections. The speaker also emphasised the importance of the questions of competitiveness and sustainability both in the short and long term.
Rebecca Christie subsequently opened the panel discussion by asking the panellists which were, in their opinion, the most pressing matters that the new Parliament will have to tackle and how their respective political groups intended to engage with them.
Axel Minaire started his reply by emphasising that fostering European competitiveness will require reforms, an innovation-friendly environment, as well as a skilled workforce, among others. He identified the European Green Deal as the most crucial legislative file, with special regard to its implementation. Mr Minaire also highlighted the EU Emission Trading Scheme (ETS) as a key component of the European Green Deal, noting its aim in reducing emissions from power and industry plants by 4% annually. He subsequently mentioned the phase-in of the aviation and shipping sectors as of 2025, as well as the introduction of an “EU ETS II”, which should target emissions from both the construction and the road transport sectors. This set of measures, the speaker explained, shall have a great impact on the carbon price and, eventually, on the entire European industrial sector.
The speaker also identified the EU Carbon Border Adjustment Mechanism (CBAM) as another important tool for the European Green Deal’s implementation and mentioned its possible expansion to polluting and emitting materials such as plastic. He subsequently emphasised the interplay between the ETS and the CBAM and stated that both are essential for achieving Europe’s climate goals. However, he also warned against disproportionately affecting export industries. Mr Minaire went on to mention the successful adoption of the Renewable Energy Directive (RED), the Net Zero Industry Act (NZIA), as well as the Critical Raw Materials Act (CRM Act), which are meant to foster the resilience of the European industry and strengthen the EU industrial base and the supply chain associated with it.
Despite these achievements, Mr Minaire identified several areas where the EU needs to be more proactive, namely energy prices, better regulation, creating a level playing field between trade partners and investments’ scale. He went on to emphasise the need for a steady, price-resilient energy market, a priority that the Renew Europe Group has focused on, he clarified. Indeed, he continued, his political group aims to bring the Energy Union project and a more integrated electricity market design forward and to invest in renewables and grid capacity, with the primary goal of stabilising energy prices and of preventing Europe from facing another crisis, such as the one experienced in the past three years. The speaker also mentioned nuclear and hydrogen as two sources of energy which will help enhance Europe’s energy independence.
The speaker subsequently addressed the pivotal role of EU institutions, as also highlighted in the Antwerp Declaration for a European Industrial Deal. He mentioned that, while Renew Europe is open to cutting red tape in order to facilitate industrial activities, this process should, according to him, not come at the expense of climate action and environmental protection. Additionally, he stated that the European Parliament’s political groups need to assess together which are the most critical sectors that need investments the most in the foreseeable future. He also stressed the importance of collective thinking among all political groups and European Member States.
One of the major initiatives that the Renew Europe Group has been pushing for in the last mandate is the creation of a Sovereignty Fund. Mr Minaire then underscored the importance of finance, mentioning the Next Generation ETS revenues, projected to reach 700 billion euros by 2030, as well as the CBAM revenues, along with the necessity of large-scale investments. He also highlighted the need to restructure and reinforce foundational programs, including those which include the European Investment Bank (EIB), as well as the role of the Important Projects of Common European Interest (IPCEI). Axel Minaire concluded his reply by emphasising that all of these investments hinge on the success of the Capital Markets Union (CMU), which is urgently needed. He highlighted the critical importance of financing and identified the CMU as a key milestone that must be achieved in the next legislative mandate to support the European industrial base.
Stella Sassi responded that she would not delve into the implementation of legislation, noting that many proposals from the previous mandate had already been adopted. She emphasised that competitiveness should align with social and environmental sustainability, rather than oppose them. Ms Sassi also highlighted the potential for significant changes in both the labour market and critical supply chains if previous EU-wide initiatives are effectively implemented. Against this backdrop, she stressed the necessity for a new industrial strategy.
Stella Sassi subsequently remarked upon the importance of ensuring high social and environmental standards so that citizens can embrace change. Moreover, she stated that Europe should invest in decarbonising hard-to-abate sectors, such as the steel industry, where Europe currently relies on imports instead of fostering internal production.
Turning to questions of incentives, research and investments, she expressed disappointment with regard to the cuts to the Horizon Europe programme, emphasising that competitiveness hinges on robust research and innovation activities. The speaker also urged for an increased EU budget and stated that the funding for the Strategic Technologies for Europe Platform (STEP) initiative is insufficient, advocating instead for more substantial investments to bolster Europe’s global competitiveness, rather than merely reshuffling existing schemes.
Picking up an audience question, the moderator asked Stella Sassi whether she perceived a trade-off between sustainability and competitiveness. Using the steel industry as an example, the moderator posed the question of how to support the European industry both sustainably and without creating inflation if cheap steel cannot be sourced from overseas.
Stella Sassi responded by pointing out that the steel sector is covered by CBAM and she explained that hence there will be changes ahead in this domain. Additionally, she noted that, on the one hand, importing steel is not a sustainable practice, while, on the other hand, she highlighted that Europe’s domestic production is constantly decreasing. She added that, as it is a critical sector, relying on third-country suppliers comes with risk and she concluded her reply by stating that these factors must be carefully considered in order to set or fine-tune policy strategies.
Lars Locke responded to the initial question by stating that the EPP has traditionally supported the question of competitiveness of the European economy. He subsequently stressed the importance of creating the role of an Executive Vice-President with the competence of competitiveness, as well as the necessity of achieving a “competitiveness deal” at the EU level. He touched upon the question of the implementation phase of the European Green Deal, highlighting the need for a more manageable number of legislative proposals compared to the previous term, as he deemed the number of legislative proposals in the previous term excessive for both policymakers and industry stakeholders alike to absorb and to follow up.
Regarding regulatory burdens, Lars Locke emphasised the EPP’s prioritisation of this very issue, mentioning the EPP Group’s agreement with the Renew Europe Group’s ‘one in, two out’ initiative. He also expressed interest in the European Commission’s plans to reduce reporting requirements by 25%, citing the feedbacks received from the business community which reiterated that such a measure is crucial for enhancing competitiveness.
Transitioning to a broader perspective, Mr Locke underscored the necessity of a shift from dogmatism to pragmatism in policymaking. He subsequently advocated for technology neutrality as a general principle for upcoming legislation, asserting that politics should not favour specific technologies, but rather adopt a balanced and market-based approach. In his conclusion, Mr Locke reiterated the EPP’s stance on fostering competitiveness by emphasising the need for targeted legislative measures and a pragmatic approach to technological innovation.
Cristian Bulumac started his reply by rejecting the notion that competitiveness and sustainability are mutually exclusive choices, asserting instead that the notion of sustainability should be a prerequisite to competitiveness. Indeed, using the example of steel, he highlighted that incorporating green steel into cars might very marginally increase costs. He subsequently cautioned against catastrophising over minor price increases, suggesting that mechanisms such as CBAM, among others, have the potential to enhance innovation in clean technologies and to foster the green transition.
The speaker subsequently pointed to existing legislation that paved the way for a greener economic model, emphasising that not only is a sustainable transition not optional, but it also presents opportunities for job creation and economic growth. Mr Bulumac highlighted the Energy Performance of Buildings Directive as an example, noting the potential for developing a European industry around its implementation, such as in the production of solar panels, where Europe is currently lagging behind other parts of the world.
Regarding the transitional period between European Parliament terms and European Commission appointments, he underscored the uncertainty in forecasting political and economic scenarios. He supported the Greens’ proposal for a Green and Social Transition Fund, which is included in the political group’s manifesto, advocating that 1% of the EU’s gross domestic product (GDP) should be dedicated to supporting European industries in achieving sustainability goals, while maintaining their competitiveness. He also stressed the need for enhanced coordination within the EU, citing legislation such as the European Chips Act as crucial for fostering cooperation, rather than competition, among EU Member States.
Cristian Bulumac also addressed resource efficiency, advocating for a circular economy to address shortages of rare earth materials, while managing and exploiting electronic waste better. Mr Bulumac also touched upon the question of investments and sustainable finance as one of the issues which the EU should address. He subsequently emphasised the importance of consulting with trade unions, civil society and citizens to ensure that competitiveness efforts are balanced and inclusive in order to avoid or compensate for job losses.
The moderator asked Cristian Bulumac about the potential for contention in the upcoming round of Commission confirmations.
Cristian Bulumac noted that it is difficult to predict what is going to happen in the foreseeable future and remarked that no political negotiation is easy and that this is bound to be a challenging process.
Maxim Raym began by addressing the question of the implementation of the European Green Deal, as well as the initiatives approved during the previous legislative mandate. He emphasised the importance of calibrating these measures for both large companies and small and medium-sized enterprises (SMEs) to ensure that no one is left behind. Two key principles were reiterated by Mr Raym, namely the role of nuclear energy and the significance of Horizon Europe. Indeed, he also underscored the need to assess both the question of nuclear energy and the outcomes of Horizon Europe now that the previous term has concluded and he highlighted the ECR’s intention of scrutinising the European Green Deal and its alignment with the objectives outlined in the ‘Fit for 55’ package.
The moderator asked Maxim Raym about the upcoming votes and the potential challenges surrounding the confirmation of Ursula von der Leyen and her Commission.
Maxim Raym expressed interest in observing how events would unfold, as announcements regarding this question were awaited. He refrained from predicting whether the process would be confrontational or cooperative, noting that the process is only at the very beginning.
The moderator enquired about the handling of more technical files, highlighting that in the last mandate the political groups represented in the panel had contributed to the EU decision-making process and had collaborated several times for the finalisation of several pieces of legislation.
Lars Locke responded by emphasising the need to distinguish between the constitution of the European Parliament and the type of coalition that could be formed. He noted that the message from their group was centred, leaning towards S&D and Renew Europe. However, he acknowledged that the nature of claims and demands from S&D and other groups could vary. In the daily work of the European Parliament, and especially within the ITRE Committee, he observed good cross-party cooperation, despite some groups having reservations about others.
Maxim Raym then added that the ECR Group aims to be a constructive partner during this mandate. He highlighted the ITRE Committee’s focus on technical files, such as space, telecommunications and energy, among others, fostering a positive spirit that he hopes to continue in the new mandate.
The moderator turned to Axel Minaire with a specific question about the potential expansion of CBAM to include more construction goods, ensuring that the value chain does not circumvent these rules.
Axel Minaire began by reiterating the compatibility of the concepts of sustainability and competitiveness, concurring with Cristian Bulumac that these issues should be assessed on a case-by-case basis. He explained that CBAM is being implemented progressively due to the continued reliance on certain technologies and products from other parts of the world, acknowledging that it is difficult to be stringent from the onset. In addition, he stated that the EU should focus on gradually rebuilding the supply chain within Europe. He also stated that the EU should avoid the case of tariffs or CBAM fees applying to raw materials, but not to finished products containing those materials. He also emphasised that CBAM should minimise the phenomenon of carbon leakage, in spite of the challenges it poses.
The moderator then raised the question of critical raw materials, specifically the addition of mining and minerals to the taxonomy and invited comments on how EU policy might address these issues as part of the European Green Deal and of a renewed industrial policy.
Stella Sassi started her reply by saying that critical raw materials are needed, as they are essential for the functioning of the European economy and, if possible, they should be sourced from Europe, whenever possible, as relying on one supplier is risky, which the case of the dependency on the gas supply from Russia has demonstrated. For these reasons, she stated that the question of raw material will continue to be discussed during the next legislative mandate and she added that the implementation of the CRM Act would be also crucial.
On a similar note, Lars Locke took the floor by highlighting the importance of cutting red tape to achieve the objectives of the CMR Act, the NZIA, as well as the RED. He noted that permit times need to be shortened to enhance the competitiveness of the industry concerned. He cited an example from his native Denmark, where a proposed project to build a factory connected with the defence industry is poised to take six or seven years to get approval. He emphasised that such lengthy permit times are a hurdle and that businesses in the cleantech industry would benefit significantly from reduced permit times.
On the same note, Stella Sassi responded by emphasising that the European Parliament is very ambitious in terms of reducing permit times. She also agreed with Mr Locke by adding that several policy actions will be needed in order to foster the competitiveness and sustainability of the European economy. However, she also pointed out that sometimes policy actions often get delayed as a result of the stalemates in the Council. The speaker also stated that EU Member States also need to realise that EU-wide and effective policy actions will need to be fostered and expedited, not only by cutting red tape, but also by making procedures more efficient at the national level.
Axel Minaire took the floor by agreeing with Ms Sassi and he added that the sourcing of minerals, especially under the CRM Act, includes norms to facilitate the opening of mines in Europe, a concept that was unthinkable until recently, he emphasised. He warned that the EU will never reach self-sufficiency in terms of mineral resources and given that even small strains of the supply chain can have an impact on the connected EU industry, he praised the shift in the EU’s approach towards diversification of sources and establishing new international partnerships, such as Australia and Chile.
Going back to the question of CBAM, Maxim Raym described it as a pivotal file currently under revision. He also noted that CBAM is closely linked with the ETS. The final list of products included in CBAM is still being determined, he added, and he remarked that the current situation is a testing period and that the first data are expected to be seen soon. He concluded his reply by stating that these data will be crucial for making informed decisions.
Axel Minaire commented on the same topic, noting that Renew Europe has a different stance compared to the ECR, as his political group is supportive of both CBAM and ETS. He also acknowledged that there is a degree of worry about the ETS’s ambitions, as unfortunately CBAM alone would not be able to resolve the issues related to trade and the carbon footprint. However, he agreed with Mr Raym on the fact that both the CBAM and the ETS initiatives must be considered together. Indeed, he reiterated, if one of the two does not work as it should, the other will be less effective as well. He went on to acknowledge that, while some groups’ doubts are understandable, there is a need to move forward towards the directions which the previous legislative cycle indicated.
The moderator subsequently questioned whether initiatives such as CBAM are the best approach for generating own resources, and asked also how the EU should be able to grant the financial means for the green transition.
Cristian Bulumac firstly noted that, in the previous legislative mandate, his political group had often voted in agreement with the so-called “grand coalition” despite not being part of it, as in the case of CBAM. He then elaborated on the question of how policymakers should approach funding and investments, highlighting that fundings should not be necessarily non-refundable financing, but they should yield returns by exploiting the multiplying effect. In fact, he suggested that supporting industry competitiveness could involve loans rather than grants, and, ideally, state aid should be avoided. He also stated that the necessary funds are available, and, in his opinion, the actual question is how to prioritise them correctly. Regarding mining, Cristian Bulumac was pleased to hear the discussions on timing and environmental requirements, noting, however, that mines are not needed everywhere and emphasising that accepting that there are differences of opinion is also part of the process.
Lars Locke made a brief comment by saying that the question of increasing the EU’s own resources has a large support within the European Parliament and he added that EU Member States tend to disagree on this very question.
Axel Minaire acknowledged the difficulties of predicting the orientation of the European Council regarding the EU’s own resources by refereeing to the longstanding debate between “frugal” Member States and those which are more open to expanding the EU’s own resources. He also pointed out the challenge of fragmented capital markets in Europe and the significance of European savings flowing to other parts of the world. Against this backdrop, and given that, in his opinion, public funding alone will be insufficient, the speaker advocated for the creation of an EU-wide capital market in order to foster a more competitive and cohesive Europe. The speaker concluded his reply by emphasising that the process of creating a fully-fledged European capital market has been stalling for too long.
The moderator then asked Maxim Raym for his thoughts on the creation of a CMU.
Maxim Raym responded by focusing on the EU’s own resources. He noted that the ECR would approach this very notion, as well as the proposal of a CMU, with caution. He highlighted the need for projects that activate private financing, which is essential in order to complement the funding for the transition.
The moderator then introduced the next round of questions on economic security, including the questions emerging from the relationship with China, as well as on other necessary elements for the green transition.
Axel Minaire noted that the debate around these issues has been heated in both the European Parliament and the Council. He referenced the upcoming Draghi report, which has already sparked some discussion. In his various speeches, Mario Draghi had emphasised the need to address and prioritise European interests. Therefore, the speaker noted, a selective approach is necessary to determine when reshoring manufacturing is essential and when maintaining openness is necessary to protect the resilience of the European economy.
The speaker also discussed the importance of public procurement, especially in the context of the NZIA. Indeed, he praised the fact that efforts are already underway to reform national requirements on public procurement, particularly for net-zero industries and solar panels. He also stressed the need to take further steps in order to put these measures into further motion.
Cristian Bulumac started by engaging with the question of joint borrowing and stated that in the previous legislative term this stance had already received cross-party group support in the European Parliament, such as in the case of the Joint Motion for a Resolution of 2023. He added that the Green/EFA Group, in the person of Bas Eickhout, had recently released a paper with Michael Bloss and Sarah Mathieu, advocating for joint borrowing to fund a green transition. The paper, the speaker remarked, not only supports the idea of joint borrowing, but also highlights other necessary common measures. The speaker also highlighted that the same paper pointed out that, instead of blaming others, the EU is criticised for not stepping up its game compared to other major global players such as China and the USA, which are heavily subsidising their green transitions. Cristian Bulumac subsequently stressed the need for Europe to support its industries more robustly and to help them to scale up size and production by taking the example of solar panels and electric vehicle manufacturers. The goal of this approach, the speaker clarified, is to make Europe’s production economically viable for manufacturers and affordable for consumers under market rules.
Subsequently, Stella Sassi took the floor by stating that the S&D Group is not opposed to joint borrowing and supported the EU recovery fund, while highlighting that there is a need for a clearer recognition of the necessity to provide more funding for European industry, as emerged during the discussion following the proposition of the STEP initiative. She reiterated the need for increased financing and the importance of directing funds toward the industry by increasing the EU’s resources, especially, but not exclusively, under the Multiannual Financial Framework (MFF). The speaker eventually acknowledged the need to enhance the EU’s industrial capacity also in light of the excessive dependency on China in certain sectors.
On the question of the relationship with China, Axel Minaire added that it has been intense not just within institutions, but also within industry stakeholders. For this reason, he noted, a common European approach is a challenge for the EU, as it needs to find a way to set a common industrial and trade policy which benefits the European industry as a whole.
In terms of joint borrowing, Lars Locke noted that the topic has been controversial within the EPP Group itself and added that with a new cohort of Members of the European Parliament (MEPs) predicting possible future evolutions of these questions is challenging. Additionally, he emphasised Europe’s deep integration in the supply chain with China, noting that it would be unrealistic to sever ties with China. He highlighted the necessity of having China on board to partly support the green transition in Europe. In the short term, he acknowledged the importance of measures such as the imposition of duties in order to ensure a level playing field. However, in terms of the long-term situation, Mr Locke stressed the need to focus more on making Europe’s economy more competitive. For these reasons, he reiterated the need to cut Europe’s excessive regulation which stifles business and he called for a rollback of excessive regulatory burden so as to make the EU’s economy more agile. Finally, the speaker argued in favour of more flexible labour markets, stating that increased flexibility is key to competitiveness.
Maxim Raym emphasised the need for careful consideration in order to avoid inadvertently giving competitive advantages to EU competitors. He also expressed interest in how the EU-China tariff argument on electric will evolve, as well as how the question of electrification infrastructure would be resolved. He eventually reiterated the opinion that the effect of the legislation on the green transition should be evaluated in order to not leave anyone behind.
Do you wish to know more about the issues discussed in this debate? Then check out the selected sources provided below!
EPP Lead Candidate delivers speech in Munich, EPP Group
An Economy that Works for All, European Greens
Priorities 2024 – 2029. Our vision to Renew Europe: from reflection to action, Renew Europe
Socialists & Democrats – Our key demands for 2024-2029, S&D Group
The Antwerp Declaration for a European Industrial Deal
Enrico Letta’s Report on the Future of the Single Market, European Commission
Industrial policy is back but the bar to get it right is high, International Monetary Fund (IMF)
Competitive sustainability should guide the next European Commission, not deregulation, IDDRI
Capital markets union: A plan to unlock funding for Europe’s growth, European Commission
A European Sovereignty Fund (EUSF), In-depth Analysis, European Parliament Think Tank
EU Emissions Trading System (EU ETS), European Commission
Carbon Border Adjustment Mechanism (CBAM), European Commission
Renewable Energy Directive (RED), European Commission
Critical Raw Materials Act (CRM Act), European Commission
Energy union, European Council
Electricity market design, European Commission
2021-2027 long-term EU budget & NextGenerationEU, European Commission
Horizon Europe, Research and innovation funding programme until 2027, European Commission
Strategic Technologies for Europe Platform, European Union
Energy Performance of Buildings Directive, European Commission
