The European Commission’s proposal for the Net Zero Industry Act reads more like a Zero Industry Act, Marco Mensink, Director General, Cefic said in a media release. It is very unlikely to become a game changer for the EU industry’s competitiveness as it does not look at the problem from the business’s and investor’s perspective. On top of the European gas price being about 5 times the US, it does not match the USA IRA (Inflation Reduction Act) in whatever way, Mensink added.

According to Mensink, the Act focuses too much on capital expenditures ignoring incentives to reduce day-to-day operational expenses, which is the “carrot” the US Inflation Reduction Act is offering, especially on hydrogen and carbon capture and storage. You can invest into an electrolyser but you won’t have any renewable hydrogen if the electricity you need to produce the hydrogen with is so expensive that the hydrogen will either not be bought or sold at a loss.

Moreover, the IRA will draw our customers to the USA, the battery producers, electrolysers, renewables producers, who will make technologies from US produced chemicals. Even if the Net-Zero Industry Act brings back some of the customers to Europe, they will import the main materials they will use from abroad as they are made at much lower costs.

Also, the list of technologies supported by this proposal largely ignores the energy intensive industry decarbonisation and the circularity dimension. “We can’t reach the 2050 climate goals without building a competitive circular economy: using waste, captured carbon or renewable resources as feedstock are all viable ways to reduce emissions across all industries and cut the EU dependence on raw materials imports,” the release noted.

Cefic calls for a comprehensive industrial policy that provides:

A sectoral and holistic view on industrial transformation, such as in the Transition Pathway for the chemical industry just published by the same European Commission.

Recognition of interdependencies between value chains and the role played by chemicals, raw materials and processes in the transition to a net-zero and circular economy.

Access to energy and to raw materials at a competitive price. Such policies should be supported by trade agreements and global raw materials outreach.

Focus on export competitiveness and the value brought to Europe through exports, also in Carbon Border Adjustment Measures.

Workable, timely, and accessible funding support for both operating costs and capital expenditures, for all sizes of enterprises (including SMEs).

In short, we call upon the Commission and Member States to get their act together.