EU Competitiveness Compass eyes cheaper energy, greater coordination
The European Commission presented its Competitiveness Compass initiative on Wednesday, which foresees a tailor-made action plan for the steel sector, as well as plans to bring down energy prices and introduce European preference in public procurement.
The initiative aims to make the EU market competitive based on recommendations issued by the much-lauded Draghi Report published last September, Kallanish notes.
Over the last two decades, Europe has not kept pace with other major economies due to a persistent gap in productivity growth, the Commission notes. It must act urgently to tackle longstanding barriers and structural weaknesses that hold it back, it adds.
The Commission wants to drive development and industrial adoption of AI in key sectors; promote advanced materials, robotics and space technologies; and remove red tape and risk that is preventing new companies from emerging and scaling up. Companies will benefit from one single set of rules wherever they invest and operate in the Single Market, the Commission says.
The Clean Industrial Deal will aim to make the EU a competitive manufacturing location while simultaneously promoting decarbonisation. An Affordable Energy Action Plan will help bring down energy prices and costs, while an Industrial Decarbonisation Accelerator Act will extend accelerated permitting to sectors in transition.
The Compass refers to a new range of Clean Trade and Investment Partnerships to help secure supply of raw materials from across the globe. Within the internal market, the review of the Public Procurement rules will allow for the introduction of a European preference in public procurement for critical sectors and technologies.
Amid the enablers identified by the Commission, a Horizontal Single Market Strategy will modernise the governance framework, removing intra-EU barriers and preventing the creation of new ones. The Commission will also introduce a Competitiveness Coordination Tool, which will work with Member States to ensure implementation at EU and national level of shared EU policy objectives.
Adam Smith Poland
Eurofer calls for implementation of Draghi’s EU Economic Competitiveness Plan
A new, nearly 400-page report from former ECB president Mario Draghi outlining steps to revive EU economic competitiveness should be integrated into the upcoming Clean Industrial Deal and urgently implemented, says European steelmakers association Eurofer. The report says the EU faces “slow agony” unless it catches up with competitors.
The report, which aims to boost EU investment by €800 billion ($881.7 billion) per year, recognises a number of steel-relevant issues.
The phasing out of free allowances and the replacement of the current Emissions Trading System (ETS) with the Carbon Border Adjustment Mechanism (CBAM) entail high delocalisation risks. Additional fixes are needed to make CBAM effective, coupled with close monitoring to avoid circumvention and resource shuffling, a solution for EU exports and the extension of CBAM to downstream sectors, Eurofer says in a note sent to Kallanish.
Despite the growing share of renewables in the grid, households and businesses do not yet benefit from low energy prices, it continues. The European steel industry expects urgent measures that lead to this objective in the short term.
“There are insufficient financial incentives and resources for the industrial transition, as the EU Innovation Fund alone is not enough, while only a fraction of ETS revenues is currently invested in the decarbonisation of energy-intensive sectors such as steel,” Eurofer points out. Support is needed for both capital and operational expenditure via the earmarking of ETS allowances. The Hydrogen Bank and Carbon Contracts for Difference should also be used to support the transition.
The introduction of a minimum quota in public procurement and auctions for locally produced clean tech products and components is strongly recommended.
Moreover, the EU should maintain a flexible trade defence policy to react quickly to market distortions while also working on structural solutions.
“Economic growth in Europe has been weak compared to the US and China for a long time, but the sense of urgency around economic reform outside of crises was lacking,” ING Bank says of Draghi’’s report. “In recent years, the global context around the economy has changed. The energy crisis, increased global competition and geopolitical risks have exposed threats to the European economic model, resulting in a louder wake-up call for change.”
“Getting political support for the proposed plans will be the biggest challenge in the current political climate. The European parliamentary elections already indicated that the political mood in Europe is rather shifting to less Europe instead of more Europe,” ING warns.
Adam Smith Poland
