Shell & bp: Is the Energy Transition in Europe in Trouble?
A significant number of industry leaders, including energy giants like Shell and bp and manufacturing behemoth Tata Steel, have banded together under a common banner.
Their goal is clear: to push the European Commission to spark the struggling clean energy sector into action.
They warn that without creating demand for cleaner industrial products, Europe might witness its competitive edge fading into oblivion, especially in a world increasingly opting for greener alternatives.
Decoding the crisis in European industries
The collaborative letter penned to the European Commission does more than just raise alarms. It details exactly why these industries feel besieged.
The combination of escalating energy costs, a shortage of skilled labour and the influx of cheaper, less-regulated imports has started to undermine Europe's attractiveness as an industrial hub.
More troubling is the fact that steering towards sustainable practices, though noble, is not paying off financially for these companies.
Investments in cleaner technology translate to higher production costs, pushing sustainable leaders into a tight economic corner without competitive pricing.
The industry's once robust frame is now battling survival, burdened by the very costs that these sustainable changes entail.
The letter says: “The years ahead will be decisive for Europe’s industrial sector. By 2040, emission allowances will have run out and European industry is expected to reach zero emissions.
“Without intervention, Europe is heading towards an industrial exodus without any winners.”
The groups add: “We therefore urge the new European Commission to boost investments by focusing on demand creation.
“Demand creation means creating European markets near the end of value chains for cleaner industrial products.
“This will give European companies better prospects to invest in these products, allow Europe to retain a degree of autonomy and enable energy and raw material transitions to accelerate.”
Finding a viable solution
There's no magical cure or perfect counterstrike to the multitude of challenges faced, but these 74 corporations and organisations believe in the concept of 'demand creation.'
This approach not only addresses the economic part of the equation but integrates it with environmental goals.
What they seek is an ecosystem where cleaner production is not just a choice but a market-driven necessity fuelled by policies and consumer demands.
They say: “How can Europe maintain a degree of industrial autonomy while simultaneously achieving decarbonisation?
“What is the way to link industrial policy and climate policy? How can European companies gain new perspectives, precisely by investing in cleaner technology?
“As signatories of this Call for Demand Creation, we believe that in addition to CO₂ pricing through ETS and CBAM, we will need to focus on demand creation to achieve new investment prospects.”
These groups are not just vocally supportive but are practically pushing for a shift towards demand creation strategies similar to those already implemented in other sectors like the biofuel industry via the EU's enforced standards on sustainable fuels.
Future prospects for the energy transition
Demand creation, in practice, involves stipulations that mandate certain percentages of cleaner products in various industrial outputs.
A prime example detailed in the letter is the regulation around biofuels in Europe, where mandates require fuel companies to blend a specified percentage of sustainable fuels into their products.
This has, in turn, catalysed investment in sustainable fuel production, benefiting both the industry and the environment.
Moreover, the plea is to adopt such models widely across other products including plastics, metals and building materials.
"By expanding these principles to other sectors, we aim to reinvigorate Europe’s industrial landscape, making clean-tech not just feasible but financially attractive and competitive on a global scale," the letter reads.
What adds weight to this appeal is the roster of signatories that reads like a veritable who's who of the industrial and energy sectors.
From energy titans like Shell and bp to major players in infrastructure and technology such as Vattenfall, RWE and Ørsted, every name underscores a united front ready to propel Europe towards a cleaner, more sustainable future.
The real work begins now, as these stakeholders extend an invitation to the European Commission to discuss, develop and deploy demand creation tactics that can be a game-changer for the continent's environmental and economic landscape.
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