ClimateEnvironment

The Green Deal Industrial Plan:  the cornerstone of an economic, environmental, and strategic European policy? 

By Jean Hornain, CEO of CITEO

On the 20th of March the IPCC published its 6th synthesis report, reminding us of the interdependence of climate, ecosystems, biodiversity, and human societies. It concludes that, due to human activities, the global surface temperature has risen by 1.1°C in comparison with the pre-industrial era and thus challenging our objective to limit global warming to 1.5°C by the end of the century, as set in the Paris Agreement. It also recalls the impact on biodiversity, with 75% of terrestrial environments and 40% of marine ecosystems currently heavily degraded. A crisis, put back on the international political agenda with the COP15 leading, last December, to a historical agreement to protect biodiversity. 

This climate emergency is compounded by a tense geopolitical context.

The Covid-19 crisis and the invasion of Ukraine by Russia-sanctioned by the international community and the EU- has raised awareness on the strategic dimension of controlling European’ supply chains by its competitiveness in the green industry sector, challenged recently by the US’ declarations with the Inflation Reduction Act1 and by China industry. 

Starting in 2019, the European Union engaged its political sustainable transition with the Green Deal, completed in March 2023, with the announcement of the Green Deal Industrial Plan marking the beginning of a new European economic strategy with the following guiding principles: ecology, reindustrialisation, competitiveness, strategic autonomy.

This new strategy, composed of 3 legislative pillars (the Net-zero Industry Act, Critical Raw Materials Act and the reform of the electricity market design) puts once again the circular economy as the key driver to achieve the Union’s objectives.  

As pioneer in sustainable development since the early 1990s in France, Citeo -French company in charge of the Extended Producer Responsibility for household packaging and graphic papers- is convinced that circular economy plays a major role in the development of a more resilient European economy. Pursuant its “raison d’être”, as a purpose company, Citeo supports the Green Deal Industrial Plan and reaffirms the central role of circular economy, aiming to combine economic and environmental performances. Nonetheless, it is decisive to ensure a coherent European strategy, including with the European Biodiversity Strategy.

The UE responses to the international stakes

For a green and low material transition in compliance with the European Biodiversity Strategy

Citeo puts the protection of biodiversity at the core of its “raison d’être” and outlines in its roadmap the mobilisation of its entire ecosystem and to promote common solutions for the preservation of biodiversity. Citeo fosters a circular society where the economic cycle and the natural cycle are sealed off from one another at every level of the value chain. This is why, and pushed by the Single-Use Plastic Directive, Citeo has particularly invested itself for the prevention of waste littering to preserve ecosystems. 

Citeo believes that the preservation of ecosystems is part of the strategy to achieve industrial decarbonisation in Europe since the objective is twofold: to make the material accessible and to avoid drawing on natural resources.

While the Critical Raw Materials and the Net-Zero Industry Acts aim to facilitate the granting of licence to speed up the development of the green industry and to enhance, in the case of the Critical Raw Materials Act, the supply of raw materials by promoting the extraction on European territory, it should not undermine the European Biodiversity strategy for 2030 which aims to put Europe’s biodiversity on the path to recovery by 2030. 

A transition at the heart of which the circular economy has a central role to play in articulating both green growth and decoupling at each step of the value chain.   

The circular economy, a lever for strategic autonomy for raw materials

As experienced in 2021 for the packaging and graphic papers sector where the market faced tensions on the supply of paper pulp, virgin material is a limited resource. In this context of shortage, the European market for recycled paper materials has largely relieved the supply by providing 57 million tonnes of recycled paper. On the French scale alone, thanks to the work of Citeo and its ecosystem, the market provided more than 2 million tonnes of recycled paper. This shows the central role that recycling can play toward the strategic autonomy of the Union. 

A model of green transition with low raw materials

It is precisely why Citeo recognises the need for the Critical Raw Materials Act that aims to secure the supply chain of strategic raw materials and particularly the target of 15% of the annual consumption recycled by 2030. Citeo supports the establishment of robust targets for recycling and encourage the development of innovation in the recycling sector to ensure the development of a strategic EU green sovereignty. In the packaging and paper sectors, recycling rates are high: 72% in the household packaging sector and 62% in the paper sector. We know that there are significant development needs in all materials: industrialisation, improvement of the technical and environmental performances of the sectors, outlets, etc.

There is a need to multiply strategies and engage all stakeholders through eco-designing but also by maximising the use of resources (prevention, reuse, and recycling) which is crucial in terms of strategic sourcing. By ensuring permanent magnets’ recyclability and requiring information on their composition to facilitate the work of recycling facilities, the European Commission is moving toward the right direction with the Critical Material Act.  Citeo recommends extending those specific dispositions to a larger list of products to build a more resilient EU market. 

This is a strategic territorial asset that is linked to proximity. The challenge is to keep the already existing industry and encourage the competitiveness of materials.

For a local, sustainable, and competitive reindustrialisation

Citeo believes industrial relocation makes it possible to have improved controls on the production by way of high-quality European standards -health, environmental, social- that are among the most ambitious. While this strategy will have a positive social and environmental impact, it should also be economically sustainable for businesses along the value chain. The EU must therefore provide mechanisms to support the European market.

The development of a competitive market for recycled materials is crucial for a successful green yet low material transition. This competitiveness is of two kinds, regarding the market of virgin material and the foreign market of recycle materials that are both more attractive price wise. 

The market for recycled raw materials must ensure that recycled raw materials remains in the European market, as available resources, in quality and quantity and with value-added outlets. It must allow the reintegration of the material by focusing on high value-added applications. Financial and legal tools need to be mobilized to ensure the sustainability of a recycled materials market. Therefore, Citeo believes in the relevance of adopting complementary measures to ensure the resilience of the internal market and thus: 

  • Supports the new Regulation on Waste Shipments to avoid the flee of raw recycled material and increase the local supply in term of quantity and quality; 
  • Supports measures such as the Packaging and Packaging Waste Regulation setting mandatory recycled content targets to drive the demand for recycled raw materials, which should be accompanied with a tool granting obliged companies a fair access to secondary raw materials;
  • Recommends extending the Carbon Border Adjustment Mechanism (CBAM), which defines an acceptable GHG emission threshold on all goods imported into the EU to strengthen the local market, to plastic;
  • Calls for more transversality among the regulation and the sectors to promote a global yet coherent circular economy strategy.

The reindustrialisation of the Union will allow the development of generate numerous employments in the circular economy ecosystem and the Greentech sector with a European workforce constituting a central element of the strategic sovereignty for the continent. 

The Green Deal Industrial Plan should not be built in isolation from other European legislation and needs to provide stability and visibility to encourage the European industry to innovate and invest for the future. 

1 -The White House, A guidebook to the inflation reduction act’s investments in clean energy and climate action, January 2023