EU needs to make Green and Industrial Deals go hand in hand [Promoted content]

Today, the EU is at a crossroads. It has committed through the Green Deal to fully decarbonise by 2050 and decouple economic growth from resource use yet it needs to uphold its steadfastness for a European Industrial Deal to make industry competitive, sustainable, and resilient, as stated in the recent Antwerp Declaration. So, how do we boost and futureproof EU industry within the Green Deal’s framework? 

Josu Jon Imaz is the Chief Executive Officer of Repsol SA. 

Let me first say that European industry plays an important role in ensuring social welfare. Industry generates stable, well-paid quality jobs. Industry fuels innovation and technology on the continent. A clear industrial project will, therefore, help guarantee opportunities for our youth to have a promising future in line with what their parents had, or even better. 

However, European industry is struggling, and investment is stalling. The ongoing conflict in Ukraine, war and rising tensions in the Middle East, Chinese overcapacity and exports, and a US economy boosted by the Inflation Reduction Act, are all external shocks to Europe’s industrial base and its competitiveness. 

On top of this, Europe has not cared for its industry in recent decades. Political and social leaders have been advocating for the end of industrial society and its replacement by a service society, no doubt seeing this as a modernisation process. Many policies have been developed in Europe without correctly assessing their impact on the industrial fabric, which has resulted in the outsourcing and destruction of a considerable part of European industry. The EU failed to reach its objective of industry representing 20% of total GDP by 2020, and Europe has lost 3.5 percentage points of industrial GDP in the last twenty years together with millions of industrial jobs. 

Therefore, making sure the EU remains strong and competitive requires an Open Strategic Autonomy framework, as detailed in the Antwerp Declaration. This means retaining and investing in basic industries. Without a clear plan to support our industries, Europe’s vulnerability to external forces will increase, and autonomy in critical sectors will be jeopardised, including the process of reaching our decarbonisation goals. That’s a risky position to be in, and we must take action. 

Combining decarbonisation and security of energy supply, private and public sectors 

More than 700 industrial companies and almost 300 associations and trade unions have signed the Antwerp Declaration, underscoring the critical need for clarity, predictability, and trust in Europe’s industrial policy, and urging action from Member State governments and the next European Commission and Parliament.  

One of the key calls in this joint declaration is to make Europe a globally competitive energy provider. We must continue to decarbonise without damaging our security of supply and the accessibility of energy for our citizens and businesses. For this, we need a holistic EU Energy Strategy that guarantees a stable and affordable supply of sustainable energy, with a concrete action plan to promote renewable fuels as a complementary solution to renewable electricity and hydrogen and help us reach our climate goals in a faster and more cost-efficient manner.  

As transport is a critical sector in the EU that generates about a quarter of the CO2 emissions in the Union, it is paramount that a comprehensive EU Renewable Liquid Fuels Strategy is developed for all modes of transport, building on and improving existing regulation to unlock potential private investment. Critically, renewable fuels must be included in road transport regulations, both for light and heavy-duty vehicles.  

Effective legislation can provide incentives to invest in every technology that results in decarbonisation. One way of achieving this is to prioritise a revision of the Energy Tax Directive (ETD), with the current hydrocarbon tax to evolve into a CO2 tax. The current framework is over 20 years old and needs an update to reflect the evolution of renewable fuels, setting a level playing field in minimum tax levels and reflecting environmental performance.  

Governance is also needed to achieve Europe’s two-fold ambition, and industrial policies must once again have their own identity and ambitions in the European institutions. Just as the Net-Zero Industry Act identifies strategic net-zero technologies, we must also define the pivotal sectors, building on today’s industrial strengths, that will drive the European Union’s success in climate, industrial, and social policies. As stated in the Antwerp Declaration, to continue to grow European industry, we need a European Industrial Deal on the same level as a mutually reinforcing European Green Deal.  

Incentivising, integrating & investing 

Finally, to ensure Europe’s industrial competitiveness and meet its decarbonisation targets, we need to rethink our financing structure. Europe needs a new funding scheme to ignite significant investment in strategic industries, like energy, which will boost manufacturing, create vital jobs, and grow the continent’s economy.  

It’s not a question of more public money, but rather about making it easier for private investment by creating an open approach to different technological solutions. For this, we need swift and decisive action from the next European Commission. We must create a financial roadmap to harness private and public investment in support of flailing industries and build a stronger European value chain. A firm commitment to financial support and regulatory stability will provide a signal to global investors that Europe is open for business and our industries offer a strong return on investment.  

At Repsol, we are working tirelessly to reduce our carbon footprint. We have invested an average of one billion euros a year in industry in Spain over the last fifteen years to modernise and transform our industrial oil refining and petrochemical complexes into multi-energy hubs that can progressively convert more renewable raw materials and waste into low-carbon products. In my humble opinion, the transformation that we are undergoing as a company shows that it is possible to be ambitious in both decarbonisation and industrial activity. We want to continue working, in partnership with the EU’s ambitions, to put all our talent and technological and industrial capabilities at the service of a competitive energy transition committed to industry and employment in Europe.