CID - will this novelty take ground in Malta
What many find most worrying, however, is how Europe is crumbling in its standing as a business competitor in the global economy
by George M. Mangion
The European Commission’s Clean Industrial Deal (CID) could prove to be a good balance between greening the economy without damaging competitiveness. CID is part of the broader European Green Deal, which aims to make Europe the first climate-neutral continent by 2050. The “Deal” specifically focuses on transforming the industrial sector to achieve sustainability, reduce greenhouse gas emissions, and promote the use of clean technologies.
Here are some key aspects of the new impetus, pivoted to low competitiveness to buttress concerns over current sluggish economic growth. In future, when fully enforced - such CID rules will apply to medium sized firms with over 250 employees and a 40-million-euro turnover. The proposals will need approval from EU states and the European Parliament. In unveiling such new measures, the Commission reiterated its target to make its economy carbon-neutral by 2050 and promised to "stay the course" on objectives such as cutting greenhouse gas emissions by 55 percent by 2030.
As can be expected, the changes will be hotly debated in the EU parliament, with centrists, left-wing and green lawmakers opposed to weakening environmental rules. It seeks to position Europe as a leader in the global transition to a green economy while ensuring a fair and inclusive process for all stakeholders involved. It prioritizes several key industries, for decarbonization efforts, recognizing that these sectors are significant contributors to greenhouse gas emissions and play a crucial role in the overall transition to a sustainable and climate-neutral economy.
For instance, cement production is a major source of CO2 emissions in Europe, due to the chemical processes involved and the energy-intensive nature of production. Naturally, the deal (when in force) encourages the development of alternative binders, carbon capture and storage (CCS) technologies, and the use of waste materials in cement production to reduce emissions. The EU aims to provide financial support and incentives for these industries to invest in cleaner technologies and processes, helping them remain competitive while reducing emissions.
The issue has taken on acute urgency with US President Donald Trump currently pushing an America First strategy that risks kindling a trade war with the imposition of a 25% tariff on all exports from Europe. As Trump berates his predecessor's push to bolster clean tech investment, Brussels sees this as a unique opportunity for Europe to act. So, what are the ideals of CID? Its main objective is to decarbonize the industrial sector, which is a significant contributor to greenhouse gas emissions in Europe. By promoting clean technologies and sustainable practices, the deal is expected to create new jobs in green industries and support the transition of workers from traditional sectors to more sustainable roles.
When fully enacted, it also emphasizes the importance of research and innovation in developing low-carbon technologies. By investing more in R&D, the EU aims to support industries in finding sustainable solutions that can reduce emissions without compromising competitiveness. For a start, Malta is a laggard in spending on R&D. When compared to advanced European countries, who spend upwards of 3 to 4% of GDP in R&D, Malta struggles along with a mere 0.7% of GDP. As a neutral country, our saving on defence spending may be beneficially diverted to financing higher R&D budgets. Again, rapid property development planned during the past decade has exacerbated the evils of carbon emissions.
The local burgeoning construction industry (which is a poor contributor to GDP) is a significant consumer of materials and energy. With EU’s help we can seriously consider how to promote sustainable building practices, enforce energy-efficient designs, and the use of low-carbon materials in construction. Back to CID, it seeks to position Europe as a leader in the development and deployment of green technologies. Theoretically armed with financial assistance for smaller economies, European Investment Bank (EIB) endeavours to promote investments including renewable energy, energy efficiency, and low-carbon production processes.
This includes support for research and development to drive innovation in sustainable industrial practices. Many question - why are economies such as Germany, Italy and France teetering on the brink of an excessive deficit default. The sheer answer is that the EU industrial set-up is uncompetitive and is prone to a high cost of living syndrome. Observers, admit that certain industries, such as steel, cement, and chemicals, face significant challenges in transitioning to higher profitability to match competitors in the US and Asian markets. Yet, EU boldly aims to provide targeted support and incentives for these sectors to adopt cleaner technologies and practices.
As in Malta, WasteServ has pioneered to inculcate a policy of the Circular Economy actively encouraging industries to minimize waste, recycle materials, and design products for longevity and reuse. This approach aims to reduce resource consumption and environmental impact. The ambitious ‘ECOHIVE’ project constitutes the largest ever investment in the waste management sector in Malta. To effectively protect European industries from unfair competition in US and China, the Clean Industrial Deal includes the introduction of a Carbon Border Adjustment Mechanism.
This mechanism aims to impose tariffs on imports of goods from countries with less stringent climate policies, ensuring a level playing field for European producers. Most welcome is the European Investment Bank (EIB) as it plays a crucial role in financing clean industrial projects, providing loans and investments to support the development of sustainable technologies and infrastructure. This tactical yet ambitious approach seeks to balance environmental goals with economic competitiveness, ensuring that European industries can thrive in a sustainable manner and survive unfair competition when faced with higher tariffs for exports to the US.
By focusing on these polluting sectors, the European Commission aims to drive significant reductions in emissions, promote sustainable practices, and enhance the competitiveness of European industries in the global market. The initiatives are designed to foster collaboration, innovation, and investment in clean technologies to achieve the EU's climate goals. The issue of carbon leakage refers to the situation where businesses transfer production to countries with less stringent climate policies, resulting in an increase in greenhouse gas emissions globally, rather than a decrease.
For starters, the EU executive told Member states to cut taxes on electricity bills to help consumers and firms. As in Malta, when the socialist government reduced electricity and water tariffs by 25% twelve years ago, perhaps now is an ideal time for Electrogas to grant a similar cut. This goes some way to strengthen business resolve in fighting high tariffs imposed on exports to the US. What many find most worrying, however, is how Europe is crumbling in its standing as a business competitor in the global economy.
