Why an EU regulatory slow-down is urgent

By Christian Ehler MEP, EPP Group Spokesman in Parliament's Committee on Industry, Research and Energy

When one considers for a moment that our lives and our way of life depend on European businesses, one wonders how these companies are surviving or will survive the onslaught of the looming winter energy crisis.

A whopping 99 percent of businesses in the EU are small and medium-sized companies and many of them are run by families. Had it just been the skyrocketing energy bills, it would have been one thing, but what we are talking about here is the perfect storm of three or four different crises merging into one big calamity. Never in the history of the EU have businesses faced such challenges.

Today, European companies are battling strong headwinds due to inflation, the side-effects of lockdowns, supply chain problems, scarcity of raw materials, and they will have to invest to adapt to the new Green Deal rules and digital transition. They also have to maintain their global competitiveness in a world where our global competitors choose protectionist measures to give their industries breathing space, to weather this storm and achieve the sustainability transition we need.

For example, through the Inflation Reduction Act, the US is increasing tax credits for clean energy technologies produced in the US. This stands in stark contrast to the regulatory approach chosen by the EU through the Fit for 55 package and the RePowerEU revisions which set strict legal objectives on energy use without ensuring matching investments to achieve the objectives. We need to do more to help our companies in these complicated times.

One thing we could do to help them is to stop putting them under even more strain coming from new EU laws. If the European Commission is sensitive enough to these crushing needs, it should delay new EU laws that are not directly helping Europe face these crises. If a new law is not absolutely necessary at this point in time, we should postpone it. One particular law stands out in this regard and that is REACH.

The announcement by President von der Leyen that the revision of REACH will be postponed to the 4th quarter of 2023 is a welcome signal. It is a sign that the Commission is starting to understand the predicament our industry is in, but it is not enough. This law will still usher in new costs not only to the chemical industry but also to those companies that depend on it. The effects will simply be devastating.

Other suitable candidates would be all the new laws that put new reporting obligations or new needs for permits on European companies. For example, the Industrial Emissions Directive should not be changed at this time. Adapting to these new laws would mean that our companies need to spend additional money on top of the money they already have to spend to move to more sustainable energy, the historically high energy bills and the increased prices for raw materials - and all of this during a time of extreme inflation. We should not add to this and should therefore hold off on new rules that would cost additional money.

Regulatory and administrative burdens on enterprises and especially on Small and Medium-sized Enterprises should be reduced to the largest extent possible, reflecting the ‘one in one out’ principle.

This is what the EU can do but the EU governments can also do their part. They should decrease their current legal and administrative burdens on businesses, especially those laws that restrict the production of energy.

We are in a Bermuda Triangle of challenges: on the one hand, we want to have a transformative change of our economy in Europe to meet our CO2 reduction ambitions. And on the other hand, we are confronted with high energy bills. Thirdly, we are still reeling from the economic crisis brought about by Corona where global markets are disturbed and supply chains still don’t work. Amid this uncertainty, the EPP Group’s objective is to make it feasible for the industry and for the economy to deliver on the EU’s green objectives.

Indeed, we, as well as the European industry, support the EU climate laws, with many companies already leading the way and embracing change as an opportunity. However, to play their part, our companies need to have the opportunity to invest and under the current circumstances, this is already extremely difficult. Instead of making it more difficult with new laws, we should be helping our companies by making investments become more sustainable and more competitive.

Without our companies, Europe can turn off the light, close the door, send people home on unemployment benefits and sink into a deep recession. At this moment in time, a slow-down in creating new EU legislation is reasonable and indeed urgent.