For many years, Europe has more and more outsourced trade, manufacturing, and the manufacturing and processing of uncooked supplies to low-wage international locations, turning a blind eye to the sustainability (or lack thereof!) of imported merchandise as a result of it was expedient and made short-term financial sense. However the fallout of the pandemic and warfare in Ukraine is making the pendulum swing the opposite manner.
Paul Voss is the Director Basic of European Aluminium.
Policymakers face the stark realisation that the EU is excessively reliant on third international locations for the uncooked supplies wanted to perform its inexperienced and digital transformation. In an more and more fraught geopolitical atmosphere, this constitutes an unacceptable strategic vulnerability.
Aluminium: a strategic uncooked materials and associate for Europe’s important targets
Aluminium is likely one of the strategic uncooked supplies industries Europe can’t afford to lose. It is utilized in nearly all vitality technology, transmission, and storage applied sciences, significantly these that can ship the vitality transition, resembling wind and solar energy, different gas cells, hydrogen manufacturing, high-voltage cables, and batteries. A examine by KU Leuven exhibits that the EU vitality transition alone will result in a 30% enhance in aluminium demand by 2040, with electrical autos, solar energy, and electrical energy networks as the principle progress drivers.
The numbers communicate for themselves: Europe will want aluminium in larger portions than ever earlier than. The one query is whether or not we’ll produce it right here in Europe or outsource all aluminium manufacturing to international locations like China, the place the carbon footprint of manufacturing is as much as thrice greater and environmental and social requirements are a lot decrease.
If the European aluminium sector doesn’t obtain sufficient help to outlive the robust yr forward, there’s a real threat that there shall be no robust European aluminium trade left to produce the demand. Our place on the worldwide market has lengthy suffered from Europe’s comparatively excessive vitality costs and unfair commerce practices, however for the reason that begin of the vitality disaster, our competitiveness has been in a whole free fall.
This yr, we’ve got already misplaced 50% (1.1 million tonnes) of our main aluminium manufacturing capability. The financial viability of our semi-fabrication and recycling sectors, which depend upon gasoline, has additionally been severely compromised. And whereas European vegetation are closing, China is hitting aluminium manufacturing information, including to their already huge aluminium overcapacities.
Stopping Europe’s descent into deindustrialisation
We’d like a long-overdue European industrial agenda with structural and long-term insurance policies supporting sustainable progress and our bloc’s strategic autonomy to restrict our dependence on third international locations and avert a uncooked supplies provide disaster. If designed effectively, the European Fee’s upcoming Essential Uncooked Supplies (CRM) Act will be our reply to the US Inflation Discount Act and assist stop Europe from coming into an age of deindustrialisation.
The indicators we’re receiving from the Fee are encouraging. Talking at our latest panel debate, EU Fee official Peter Handley stated the Fee won’t restrict their CRM Act to supplies featured on the present Essential Uncooked Supplies checklist however can also be set to incorporate “strategic supplies for Europe’s strategic targets,” together with aluminium. The Act will purpose “to make sure we maximise circularity, useful resource effectivity and exterior diversification of provide sources” and focuses on “constructing capacities.”
Essential Uncooked Supplies Act: key components for achievement
For the Act to attain what it units out, it wants a full worth chain strategy that accounts for all phases in manufacturing a product and ensures coherence throughout totally different coverage areas. Within the phrases of Anna-Michelle Asimakopoulou, Vice-chair of the European Parliament’s commerce committee: “We have to deliver collectively vitality coverage, competitors coverage, chemical substances regulation, environmental regulation, and funding schemes to create an ecosystem that’s going to help the aluminium trade.”
Secondly, uncooked supplies manufacturing is commonly energy-intensive, so the CRM Act should go hand in hand with facilitating entry to renewable vitality and measures to handle the disproportionately greater vitality prices our producers face in comparison with international opponents. The emergency vitality measures the Fee launched are inadequate and don’t make a dent in immediately’s terribly excessive vitality payments.
Thirdly, the Act ought to assist increase investor confidence by introducing de-risk mechanisms for personal funding and directing extra funding from present EU financing schemes to focused uncooked supplies tasks.
Lastly, the CRM Act ought to create a stronger marketplace for recovering and recycling secondary uncooked supplies (SRMs) resembling aluminium scrap. As Julia Poliscanova from the main clear transport NGO Transport & Surroundings identified, our world-leading recycling trade is simply too hampered by pink tape.
Simplifying licensing procedures and lowering the general administrative and monetary prices for delivery waste will enable extra worthwhile secondary supplies to stay in circulation as a substitute of being shipped to 3rd international locations. Selling measures to extend the effectivity of assortment, sorting, and pre-treatment of SRMs, resembling aluminium scrap, can shut the loop additional.
Our final probability to get this proper
Europe is at a important inflection level and has doubtlessly one final alternative to avoid wasting its industrial base. And whereas the CRM Act won’t have the ability to match the monetary firepower of the US and China, Europe can nonetheless flip the tide by guaranteeing that the EU’s formidable inexperienced legislative framework interprets right into a aggressive benefit for our best-in-class producers.
This text follows the coverage debate “Strategic Uncooked Supplies: Europe’s Industrial Agenda for a Sustainable and Resilient Future” supported by European Aluminium.