The time is right: Industrial Policy and the European Green Deal

The time is right: Industrial Policy and the European Green Deal

This week, there is a big article in the Financial Times about how Brussels is re-tooling industrial policy. The focus of the article is on how there is increasing support to develop the battery industry because of the growth in electric vehicles. This isn’t entirely new since it was reported on last year, but plants are now being built.  One research house  has said that “the potential value of the entire battery value chain in Europe – mining, refining, cell manufacturing, battery packs and recycling – could be €250bn in 2025. That has left EU policymakers and businesses scrambling to make sure European companies take a big slice of the action, and with it boost jobs and skills.”  One Gigafactory is to start operation in northern Sweden in 2021. With the expected growth in electric vehicles and because batteries can represent around 40% of the cost of an electric vehicle, this is an important move forward. And no doubt, those factories will be amongst the most energy-efficient globally in order to ensure their competitiveness.

The European Green Deal is coming 

While the article did not discuss it, industry really has to front and centre of the “green” revolution. The new European Commission will be coming forward with its European Green Deal.  International financial institutions such as the European Investment Bank, through its new lending policies, are defining their approach in supporting the energy transformation.

There is an increasing awareness that industry must take more ambitious steps to decarbonise. There are initiatives such as DecarbEurope, an ecosystem of 20 sectors, joining forces in a multichannel media campaign [follow the hashtag #DecarbEurope]. There is also an upcoming conference organised by the European Council for an Energy Efficient Economy (eceee) entitled Decarbonise Industry!

Much can and must be done. The Energy Efficiency Financial Institutions Group (EEFIG) supported by the European Commission and the UNEP Financial Initiative will soon have a work programme related to industrial energy efficiency.  EEFIG already brings together many financial institutions in Europe and it has other services that promote investments in industrial energy efficiency.

Energy efficiency actions must be implemented 

At the end of this year, Article 8 of the EU Energy Efficiency Directive 2012/27/EU (EED) requires large enterprises (non-SMEs) to comply with the energy audit obligation for a second time. The deadline for compliance is 5 December 2019 in most member states. To reach this, companies need to submit (or have available) an energy audit report that meets all national requirements.

Member states have different interpretations of a large company and who’s affected by Article 8. A few examples:

• Some member states follow the European rules on consolidation of data (number of employees and financial data) to determine whether a company is a non-SME, whereas others don’t require any consolidation at all or only within national borders;
• Some member states require a small office belonging to an international company to do an energy audit, whereas others don’t;
• Some member states allow sampling or only auditing part of your energy consumption; and
• The requirements for the auditors and the energy audits are different across member states.

Companies that are implementing an energy or environmental management system - certified by an independent body according to the relevant European or International standards - shall be exempted from the requirements provided that Member States ensure that the management system concerned includes an energy audit on the basis of the minimum criteria.

The important point about the audits is that there will be a wealth of recommended actions for each company to improve their energy performance. Hopefully these companies will be motivated to invest in these measures. As well, it is hoped that energy service companies and other project developers and technology suppliers will market their services to asset owners to further encourage such investments.

This is an ideal opportunity for action. While the European Parliament has declared a climate crisis and while the Commission is coming up with its Green Deal, nothing happens without investment to reduce emissions and improve energy performance. And taking such actions will improve Europe’s competitiveness.

The potential is there. Yes, it is now the right time to take action.

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