The European Commission has published a report by Mario Draghi on his vision on the future of European competitiveness. Draghi is the former European Central Bank (ECB) president and ‘one of Europe's great economic minds’, according to the Commission.
The European body tasked Draghi to prepare the report to help it develop a new Clean Industrial Deal for competitive industries and quality jobs, which will be presented in the first 100 days of the new Commission mandate.
The 328-page report identifies three main areas for action to solve Europe’s ‘existential challenge’. Draghi says the old continent will not be able to ‘become, at once, a leader in new technologies, a beacon of climate responsibility, and an independent player on the world stage’ unless it becomes more productive.
Those areas are the innovation gap with the US and China, especially in advanced technologies; decarbonisation and competitiveness; and security.
No special focus on plastics
The report includes a chapter on energy intensive industries but focusses only on the top four such industries in Europe: chemicals; basic metals; non-metallic minerals; pulp, paper, and printing. As the fifth most energy intensive industry in Europe, the report only dedicates a half-page box to plastic and rubber. It says, however, that challenges and recommendations presented in the chapter carry over to the industry in ‘large parts’.
Draghi writes that higher energy and fossil fuel prices affect rubber and plastics similarly to other energy-intensive sectors, and that the sector’s international competitiveness in the green transition also depends on the stable and competitive supply of renewable energy, necessary carbon feedstock, and the support of R&D.
The report further says that there is ‘no strong business case’ for plastics recycling at present.
“In particular, virgin material continues to be cheaper at current costs (including carbon prices), costs of landfill and waste incineration are still low, and it is difficult to earn a green premium for recycled plastics to compensate for higher costs, due also to the often limited quality of the secondary material,” Draghi writes.
PFAS
As for closing the innovation gap, Draghi gives the example of ECHA’s proposed restriction of per- and polyfluoroalkyl substances (PFAS) as a piece of legislation that distorts the level playing field and creates barriers and uncertainties for manufacturing investment.
“A possible upcoming ban on a set of PFAS substances would impact the use of substances needed to produce clean technologies (batteries and electrolysers), for which there are currently no alternatives,” the report reads.
PFAS legislation also affect the heat pump industry, one of the few green manufacturing industries where Europe leads.
“A possible upcoming ban on a set of PFAS substances may also affect the EU industry for refrigerants used in heat pumps, at a time when EU producers are adapting their production lines due to an approaching phase-out of synthetic refrigerants,” Draghi added.
The report adds that EU legislation is often complex compared with other regions, distorting the level playing field.
“Risk assessment of EU regulation may not always be based on actual exposure, imposing additional constraints on products and processes,” Draghi explains. “The PFAS regulation for example, bans 10,000 substances, but is at the same time difficult to enforce for imported products, including for a lack of laboratory capacity.”
In its simplest terms, ECHA’s proposal bans the manufacture, marketing, and use of PFAS above set limits, in combination with other substances or in mixtures as well as in articles. The common element amongst the PFAS covered in the proposal is the fluorine-carbon bond, one of the strongest bonds in organic chemistry. Once released, the material can remain in the environment for decades, even centuries.
Members of the elastomer and fluoropolymer sectors have criticised the proposed legislation for lumping all PFAS together, arguing, as recognised by Draghi, that there are beneficial uses with currently no alternatives.
Semiconductors
Another such use is in semiconductor manufacturing, key to the billion-dollar artificial intelligence (AI) industry where the EU hopes to become competitive.
There are thousands of use-cases of PFAS in semiconductors, from presence in the chemicals directly used to manufacture the chips to presence in equipment or the output of the process, such as plastic cases containing microprocessor chips.
The European R&D industry has started to look for alternatives. The Fraunhofer Institute for Applied Polymer Research (IAP), for example, has developed an alternative to PFAS membranes used during the semiconductor manufacturing process.