Europe has yet to achieve a genuine green industry deal

The EU has clearly set out its aims to lead the world on green growth. Yet only the most optimistic would say the road has been smooth so far.

Sirpa Pietikäinen is a Finnish Member of the European Parliament and a member of the European People’s Party. 

Initiatives including the Energy Performance Buildings Directive and the Nature Restoration Law have been the subject of unusually contentious debate. Despite the fact that neither the need for action nor the science behind both initiatives is disputed, they have fallen victim to the broader political and ideological conflicts that are set to drive the upcoming European Parliament elections, and shape the European Commission’s agenda for the next term.

The future of European industry looks to be heading towards the same fate. The Net Zero Industry Act (NZIA), which is being voted on next week, is being curtailed by these same dynamics.

The Net Zero Industry Act aims to bolster the union’s renewable energy and storage capacity by encouraging investment and training, and identifying priority projects “essential for reinforcing the resilience and competitiveness of the EU net-zero industry.” It has been touted as the EU’s response to the Biden’s Inflation Reduction Act, boosting Europe’s strategic autonomy and global competitiveness.

But much like the Critical Raw Materials Act (CRMA) that was passed in March – which virtually handed companies carte blanche to start new mining operations across Europe without adequate checks and balances in place – the NZIA is lacking in the carefully considered planning required to set us on the trajectory to climate neutrality.

Both these acts are missed opportunities to embed the principles of circularity into the EU’s industrial planning, and tackle the fossil fuel intensive energy demands of the sector.

According to official targets laid out in the Circular Economy Action Plan (2020), we should be aiming for the share of materials recycled and fed back into the economy to double between 2020 and 2030. 

But in a recent briefing the European Climate Neutrality Observatory (ECNO) warned that our progress on circular material use is far too slow, with worrying signs of regression in 2021 and 2022 relative to 2020.

CRMA targets for recycling raw materials were set at just 15%. In my opinion, the target should have been set at 75%.

Failure to progress on circular use not only puts our climate targets in jeopardy, but also puts human health and the natural world at risk. These dangerous dynamics pose a threat not only to the global South, but also to people across Europe.

We’ve seen what can happen firsthand in Finland, with a leaking gypsum waste pond at the Talvivaara nickel mine.

Such incidents can only be expected to rise with the passage of the CRMA, with mining companies allowed to cut corners on critical steps like environmental risk assessments and clean-ups. Easing up of permitting rules also makes it easier for mines to be opened in pristine natural areas that are essential for the EU’s biodiversity strategy.

Progress on slashing emissions in the industry sector is also moving too slowly according to ECNO, which warns that “the transition to fully decarbonised energy sources [has] hit a plateau.”

ECNO’s analysis flags that we haven’t yet laid the foundations for the “deep transformation” necessary to meet climate neutrality, and we’re now at risk of locking ourselves into fossil fuel technologies with time horizons that extend beyond what we can afford.

Worse, lobbyists are working hard to push halfway solutions like unsustainable biofuels, blue hydrogen, and carbon capture storage (CCS) that are merely dangerous and expensive sidetracks.

With the climate crisis and biodiversity loss picking up speed by the day we can ill afford to waste time up these blind alleys. We can no longer deal in half measures when it comes to setting targets or assessing solutions. We’re going to have to be bold in our thinking but also rigorous in our analysis.

Yet such an approach is facing significant political headwinds. In February, co-signers of the Antwerp Declaration for a European Industrial Deal urged the EU to “let entrepreneurship thrive to find the best solutions to overcome challenges” by avoiding “prescriptive and detailed implementing regulations” and “over reporting” in Green Deal policy targets. Signatories count among their number fossil fuel and chemical multinational giants ExxonMobil and DuPont.

As Todd D. Stern, the former United States Special Envoy for Climate Change who helped negotiate the Paris Agreement, warned in in a lecture at the London School of Economics last week, it is “those who think of themselves as grownups” and label climate action as “unrealistic” who are the biggest threat to avoiding a global catastrophe.

But sadly we are seeing important climate and environmental targets being subordinated to the short-term objectives of industry across the institutions of the EU. This kind of thinking is dangerously myopic.

Transforming industry now will mean we keep pace in innovation, and protect ourselves from the volatility and security risks of depending on international markets for energy and raw materials. At the same time we can improve our industries’ competitiveness.

The “grownup” decision is clear. The science is clear. But the fate of the Green Deal going into the next European Parliament session is far from certain.

We must not let climate objectives play second fiddle to the demands of industry. Rather we must find ways to ensure the objectives of both work together in harmony. Failure to do so is a recipe for catastrophe.