The EU's industrial policy framework: is it fit for 55?
At the latest extraordinary EESC Workers' Group meeting, we had a discussion about the role of industrial policy in the context of the Fit for 55 package and our demands for a Just Transition.
The EESC Workers´ Group welcomed the commitment by the Commission to maintain and grow its industrial and manufacturing base. However, we underlined the crucial role that social dialogue, the social partners, collective bargaining and workers´ voice“(through information, consultation and board level participation) must play in designing the future of European industry.
The Fit for 55 package of the European Commission aims to implement the European Green Deal and Climate Law. Without decisive action to curb emissions we will face dramatic ecological disturbances: extreme weather conditions, droughts, floods, food and water shortages, and eventually a catastrophic rise in the sea levels resulting in the need to resettle the vast majority of the global human population living in coastal regions. Europe must be a leading force in this effort., This massive package contains an unprecedented number of policy proposals to revise the entire EU climate and energy policy framework. The Emission Trading System (ETS) Directive, the Effort Sharing Regulation, the Renewable Energy Directive, the Energy Efficiency Directive, the Energy Tax Directive, the Regulation setting CO2 Emissions Performance Standards for Cars and Vans, will all be revised. A Strategic Plan for the quick deployment of the alternative fuels infrastructure and a new Forest Strategy have been proposed, building on existing instruments. In addition, the package contains a proposal to set up a Carbon Border Adjustment Mechanism (CBAM), as well as a proposal to establish a Climate Action Social Fund to accompany the creation of an ETS for the fuels used in road transport and heating. Lastly, two initiatives called ‘ReFuelEU Aviation’ and ‘FuelEU Maritime’ have been launched to accelerate the uptake of green fuels in aviation and shipping.
Keeping and building strong industrial value chains in the EU is crucial to reach EU climate objectives, since job creation will be among the main levers of public support for the EU climate policy, but also because industries have the potential to deliver solutions to decarbonise the EU economy. It is of the utmost strategic importance for the EU to build the European industrial leadership in the value chains leading the transition. This demands a greater role for industrial policy and effective policy coordination in the development of transition pathways for different sectors and eco-systems.
Moreover, a dramatic increase in our climate and energy ambitions must be accompanied by a Just Transition for the workers and regions impacted. While the rhetoric of ‘leaving no one behind’ is included in the package, unfortunately the Commission has added little to address the concrete impacts on workers or society at large. This is all the more frustrating in light of the high support of our citizens for a more social Europe. The Fit for 55 package fails to recognise the central importance of social dialogue and workers’ participation. On the contrary, many regions across Europe are threatened with fundamental changes of their industrial fabric and potentially massive job losses without the promised social cushioning.
Workers’ Group President Oliver Röpke commented that ‘we will not manage the transition of tomorrow without providing reliable and secure prospects for the workers in the different industrial sectors today. Unfortunately, the need for a strong and mandatory Workers´ Voice is not sufficiently addressed in the proposal. The question of a just transition requires for social, environmental, and economic sustainability to be put on equal level. This notwithstanding the reality of the fact that without decisive environmental action, we will face a social collapse of untold consequences. Yet without social justice, those measures will not happen. Recent in memory are the rise of extremist and anti-European tendencies in several Member States and a loss of confidence of citizens in the European institutions, but similar issues can arise everywhere, particularly with the current situation of the pandemic, and derail the climate fight.´
General Secretary of IndustriAll Europe Luc Triangle said “The Fit-for-55 package delivering steep emission reductions by 2030 and climate neutrality by 2050 means a revolution for our economy. Around 25 million industrial and energy sector workers will be impacted with hundreds of thousands of jobs changing as a result. So where is the social dimension in this package to ensure that we anticipate the transformation of our industries and avoid forced redundancies and social damage? Industrial workers, notably in our energy intensive industries, automotive and extractive industries, are anxious about what this will all mean for their futures. Rightly they are demanding a strong industrial policy which allows the phase in as well as the phase out of certain industries. IndustriAll Europe supports the EU Green Deal, but its climate targets must be met by an equal ambition on managing the social and employment impacts. The Green Deal requires a European legal framework on the anticipation of change, promoting quality job creation and maintenance and negotiated measures to cushion negative impacts. 'A green deal can only be successful if it will also be a social deal' has been said several times over the past year. We demand that this does not remain an empty slogan.”
In particular, there are worries that the inclusion of fuel for heating and vehicles in a new ETS could lead to a large rise in prices, which doubtlessly will be passed to the final consumer, as we are seeing these days with electricity. With 8% of the EU population unable to keep their houses warm in winter already (and as high as 36% in Bulgaria), and with a combustion engine car as the only means for transportation for many, the impact of this rise could have dramatic effects on the living conditions of the population. In general, the package must be wary of the tendency to burden common citizens with the brunt of the change, and ensure that the changes in taxation provide a progressive and fair source of resources. This is also true for the case mentioned on fuel for cars or heating, where taxes already constitute a hefty share of the final price for citizens.
Climate change is a global problem, one in which Europe can lead, but cannot solve alone – a level playing field is vital to ensure that European efforts are not undermined by aggressive global competition through carbon leakage. The proposal for a Carbon Border Adjustment Mechanism (CBAM) is therefore key and must be designed in an effective way. The pandemic has clearly shown the costs of deindustrialisation, and without a system to balance the efforts done in curbing emissions, the problem will only increase. The mechanism should therefore be sufficient to counteract the initial higher costs of sustainability, and drive pollution down globally, rather than industry out of Europe.
We have a reasonable expectation that a functioning CBAM system will make employment in the climate-friendly transformed former CO2-intensive companies and sectors more robust. However, we also warn of the risk of failure of the CBAM, in conjunction with the ETS system. The rapid phasing out of free allocation with the introduction of the CBAM could lead to major job losses in the EU if badly designed. Furthermore, revenues should be used to catalyse innovation and Just Transition in industrial sectors, with strong social conditions attached, strengthening their resilience.
We also believe too much is left for member states to decide: ‘giving the member states the option to create cost-effective manners of tackling climate change’ is as often jargon for ‘less environmental regulation on energy’ as invoking subsidiarity is to thwart EU attempts at protecting human rights, workers’ rights, working conditions, or the Rule of Law.
The Just Transition requires strong mechanisms to ensure the most unsustainable working positions are not simply turn into unemployment, with entire regions facing poverty and exodus. The ILO Guidelines for a just transition towards environmentally sustainable economies and societies for all are the result of tripartite negotiations and provide for an international Just Transition Framework that should be respected and implemented. Anticipating and managing the impact of the transition to a carbon-neutral economy is key. We stress the need for an active and permanent social dialogue and involvement of trade unions as a pre-condition for the anticipatory management of change. Information, consultation and effective collective bargaining are considered the basic tools of social dialogue at European, national and local level and must be strengthened in all member states. Furthermore, new rights, policy tools and resources will be necessary to deliver the ambition of leaving no one or region behind.
The different legislative proposals of the package contain a positive impetus to the necessary fight against climate change, and now we must make sure, both in the Parliament and in the Council (discussing with our governments in each member state) that social protection and wealth redistribution are underlined so that social and environmental sustainability enjoy equal footing, and that the Council does not water down the goals.
Oliver Röpke commented that ‘involvement of citizens and social partners will be key to ensure the just transition is truly fair and socially, economically, and environmentally sustainable, for only then it can succeed. The fair transition has a massive potential for sustainable economic growth, with quality jobs and decent living wages; if done correctly, we will not be just tackling climate change, but also the social crisis we face. If these demands are ignored, it will jeopardised the integrity of the EU and the willingness of citizens to continue to support this project".