Kemianteollisuus ry feedback on the Industrial Accelerator Act
Kemianteollisuus ry welcomes the Commission’s proposal for an Industrial Accelerator Act and its aim of boosting the development, competitiveness and resilience of the Union’s manufacturing sector and improving the functioning of the internal market. The IAA’s main focus needs to be the creation of lead markets, increasing the demand for, and scaling up the innovation and production of products and technologies that are low carbon and based on sustainable carbon sources. The main hurdle for moving from innovation to growth is insufficient market demand for alternative, non-virgin fossil products and solutions. As long as the environmental and climate impacts of virgin fossil-based products are not reflected in their price, alternative products will need regulatory push and pull measures.
The IAA needs to be a lean and enabling instrument that facilitates and promotes the transition of industry. The Commission’s proposal leaves many of the key issues to be addressed via delegated acts, and risks complexity due to its many cross-references to other EU legislative proposals, even upcoming ones. This comes with a risk of added administrative burden, which works contrary to the aim of improving competitiveness. The IAA should not be left an isolated Regulation but should work in parallel with other proposals to strengthen industrial manufacturing and the transition to a circular, climate-neutral economy, such as the Biotech Act II and the Circular Economy Act.
Article 16 of the Commission’s proposal is directly targeted at the chemical industry, making it a key topic for further consideration for Kemianteollisuus ry. Article 16 is a very important opening and an opportunity to promote bio- and circular economy efforts and competitiveness. Kemianteollisuus ry is positive about the demand-side measures for the use of sustainable carbon sources in chemicals and chemical industry products. Innovation, sustainability, circular economy and resilience should be key pillars in the development of lead markets, and this should be reflected in the IAA. All alternative sustainable carbon sources should be preferred over virgin fossil ones. In addition, legislation should support low-emission production processes.
While removing hurdles and bottlenecks in existing legislation, focus should be on the creation of markets for alternative products. The following incentives should be considered:
- Binding targets (for states, at the EU level, and/or for downstream products
- Product- or product group-specific blending obligations, as well as obligations related to material use, where appropriate
- Support mechanisms (eur/t of alternative raw material)
- Tax incentives (lower tax rates for alternative products)
The low-carbon and Union origin targets are a viable starting point for developing lead markets at this stage. It is sensible to set the targets at the end product level, and selected sectors should in principle have both EU origin and low-carbon requirements, not just either or. The definition of EU origin must take into account the global dimension of supply chains and raw materials and consider the competitiveness of European operators. The definition of low-carbon must be based on life-cycle thinking and take into account alternative material/substitution benefits. The definition must be one that does not create an administrative burden or additional reporting for operators. The definition must not overlap or conflict with existing legislation or standardization. For this reason, the definition should utilize, for example, international standards for calculating the carbon footprint of products, such as ISO 14067. Kemianteollisuus ry would support extending the scope of the IAA to plastics and fertilizers, as this would create a more direct link to the chemical industry with potential benefits for self-sufficiency and impact of the IAA.
The definition of “sustainable carbon sources” in Article 16 is a good and important definition for the chemical sector. The definition includes sustainable biomass, waste-based carbon, and synthetic carbon sources. Kemianteollisuus ry believes that this definition could also be referred to in other legislation when talking about incentives for alternative, sustainable and low carbon-based raw materials and products.
The IAA’s role as a promoter of alternative raw materials is unclear, as most of the possible measures have been left to future delegated acts. The choice of leaving details to delegated acts is not optimal but acceptable considering the complexity of the chemical sector. However, the delegated acts need to be prepared in cooperation with the relevant sector by a certain deadline.
The concreteness and level of ambition of the Commission proposal should further be increased, for example by setting binding timetables for the introduction of demand-side measures and/or other requirements. A clear timeline would reduce the potential uncertainty of the waiting period and enable a faster creation of lead markets for the use of sustainable carbon sources. Kemianteollisuus ry proposes that the Commission produce a roadmap for sustainable carbon cycles in the chemical industry, for example, no later than 12 months after the entry into force of the IAA, and the first demand-side measures no later than 18 months after the entry into force.
On the proposed FDI criteria, Kemianteollisuus ry proposes to delete these provisions altogether from the IAA. These are very strict criteria that hamper crucial investments in Europe. Currently most of the crucial larger investments into for example the battery value chain in Europe are made with funds that come from outside the EU. The FDI criteria will make the EU a less attractive investment area, and therefore the resilience of the EU will be at risk.
Union origin and reciprocity clauses are better dealt with through the Union origin criteria provisions.
Kemianteollisuus ry supports the idea of the industrial manufacturing acceleration areas and the mapping of their prior and joint permitting, where possible. This would facilitate and accelerate the commissioning of the areas and the start of operations. It is essential that the industrial manufacturing acceleration areas encompass existing industrial parks, and that the decarbonisation projects of industry encompass the entirety of the industrial transition, including so-called “retrofitting”, i.e. the integration of new technologies and operating methods into existing operations.
Speeding up and simplifying the permit-granting processes is essential for investment security and industrial competitiveness and Kemianteollisuus ry strongly supports efforts in this regard. However, many legislative proposals now include provisions for the speeding up and simplification of permit-granting processes, which raises unclarity about the full picture. It is of utmost importance that all proposals work consistently together, and that the result is true simplification for the actors involved. Clarity is therefore urgently needed as to how the different legislative proposals from the Commission work together for this purpose.
