Tag Archives: Community industrial policy

Responding to the crisis in the European automotive industry

Responding to the crisis in the European automotive industry

Outline of the Community (European Union) legislation about Responding to the crisis in the European automotive industry

Topics

These categories group together and put in context the legislative and non-legislative initiatives which deal with the same topic.

Internal market > Motor vehicles > Interactions between the automobile industry and specific policies

Responding to the crisis in the European automotive industry

Document or Iniciative

Communication from the Commission of 25 February 2009 – Responding to the crisis in the European automotive industry [COM(2009) 104 final – Not published in the Official Journal].

Summary

This Communication has the aim of getting the European automotive sector, which has suffered badly since the crisis of October 2008, moving again.

The position of the automotive sector in Europe

The European Union is the world’s largest producer of motor vehicles, producing over 18 million vehicles a year – a third of the world’s passenger cars. More than two million people work directly for this sector and twelve million indirectly.

The automotive sector therefore plays a strategic role in the Union. It makes a major contribution to GDP with an annual turnover of 780 billion EUR and a value added of more than 140 billion EUR.

However, since the beginning of the crisis during the last quarter of 2008, industrial production has dropped by 8.4%. The automotive sector is encountering many difficulties for the following reasons:

  • demand for passenger and commercial vehicles has dropped significantly, in particular due to the reduction in credit availability and declining purchasing power;
  • some companies in the automotive industry are having financial difficulties, in particular due to the reduction in credit;
  • long-term structural problems of overcapacity (currently 20% in Europe) are a handicap for automotive producers.

In addition, the forecast is for a reduction in demand for vehicles of between 12% and 18% in 2009, which will probably lead to a fall in production and threaten the jobs of 15 to 20% of the workers in the sector.

Planned strategy

The automotive sector must react quickly to the crisis by concentrating on three main challenges:

  • technology;
  • environment;
  • safety.

Europe must invest in research and development in “green vehicles” so as to implement a low-carbon economy. European regulations will enter into force in 2012 to this effect.

Industry and the public sector have an essential role to play in an approach which has four main aims:

  • to support demand in order to assist with remedying the effects of the credit squeeze;
  • to facilitate the adjustment by cushioning the costs associated with restructuring;
  • to encourage the modernisation of industry;
  • to adapt industry to the challenges of climate change.

The CARS 21 process is a strategic framework and may be modified according to future road transport and sustainable mobility requirements.

It appears to be essential to reinstate easy access to credit, by re-establishing financing at reasonable conditions and by restoring liquidity, so that consumers may once again purchase new vehicles.

Aid must be given to the financial sector and to small and medium-sized enterprises (SMEs). A temporary State aid framework was adopted in December 2008 (pdf ). This provides for subsidised loans for the manufacture of “green products” such as “green cars”.

The Commission and the European Investment Bank have planned to support industry that decides to invest in future technologies, in particular green technologies, through the 7th Research Framework Programme and the research partnership planned therein. This is a partnership between the public and the private sector covering:

  • the design of “green” vehicles (passenger cars, buses, trucks, urban vehicles, etc.);
  • infrastructure (for electric cars and hydrogen vehicles);
  • logistics.

The Commission has also studied the possibility of adopting a scrapping scheme.

The question of employment must also remain at the heart of the strategy for the automotive sector. The Commission proposes to implement the following measures via the European Social Fund (ESF):

  • support for short-time workers;
  • supporting company restructuring in this sector;
  • financing retraining;
  • anticipating change requirements;
  • matching skills.

Fair competition must become the basic principle in force on the market and a return to protectionism must be avoided.

Key issues for competitiveness in Europe

Key issues for competitiveness in Europe

Outline of the Community (European Union) legislation about Key issues for competitiveness in Europe

Topics

These categories group together and put in context the legislative and non-legislative initiatives which deal with the same topic.

Enterprise > Industry

Key issues for competitiveness in Europe

Document or Iniciative

Communication from the Commission to the Council and the European Parliament of 21 November 2003 “Some Key Issues in Europe’s Competitiveness – Towards an Integrated Approach” [COM(2003) 704 final – Not published in the Official Journal].

Summary

Competitiveness is determined by productivity growth. Therefore, a competitive economy is one that experiences high and sustained productivity growth.

Many factors have an immediate impact on competitiveness. For instance, the ability to promote research, innovation and entrepreneurship, as well as the ability to encourage investment and the level of competition, or even the ability to reap the benefits of the enlarged internal market, have a direct influence on the development of European competitiveness.

Issues for a more competitive Europe

European industry needs to be competitive if the Community is to achieve its social and environmental goals, which, in turn, ensure that the quality of life of Europe’s citizens improves.

The current state of competitiveness

At present, European productivity growth is slowing down. This slowdown is reflected by a loss of competitiveness, which is a cause for serious concern. It represents a threat to European industrial performance and to the European industry’s ability to carry out structural adjustments.

While there is currently no serious evidence to suggest that Europe is heading for deindustrialisation in the true sense of the word, the process of structural adjustment under way is certainly proving to be difficult.

Signs of weakness are emerging in several key areas in the European Union, particularly research and development, innovation, information and communication technologies (ICT), entrepreneurship and the development of new skills.

To be competitive in a global market that is more and more open to competition, it is vital that the European Union becomes more efficient. In particular, it must therefore encourage investment in research, innovation, ICT, the reorganisation of work and education, all of which are key aspects of the transition process. It is essential that European industry anticipates and better prepares itself for the challenges of adjustment.

How to meet the challenges of competitiveness

The measures taken by the European Union need to be based on an analysis of competitiveness. This analysis consists of two parts: a general economic analysis and a detailed analysis of the competitiveness of the different sectors. This will identify not only the key issues linked to competitiveness, but also the specific problems experienced in certain industrial sectors. This analysis will thus enable the European Union to determine what measures should be taken.

All Community policies must contribute to competitiveness. It is crucial, therefore, that the synergies between certain Community policies (industrial policy, research and development policy, competition policy, internal market strategy, fiscal policy, employment policy, education and training policy, environment policy, transport and energy policy, regional policy) are exploited to obtain the best results in terms of competitiveness, both at European and national level.

The European institutions and the Member States must act as the “guardians of competitiveness”: adopting and implementing the legislation needed for economic growth is their responsibility. In addition, they must carry out impact assessments systematically. In other words, they must take care to take full account of the impact of their political decisions on competitiveness.

Background

This Communication responds to the request made by the 2003 spring European Council concerning the development of a strategy for competitiveness. It also forms part of the wider debate, launched by the Commission’s Communication of 11 December 2002 on the role of industrial policy in improving the competitiveness of industry.

SET-Plan for the development of low carbon technologies

SET-Plan for the development of low carbon technologies

Outline of the Community (European Union) legislation about SET-Plan for the development of low carbon technologies

Topics

These categories group together and put in context the legislative and non-legislative initiatives which deal with the same topic.

Environment > Tackling climate change

SET-Plan for the development of low carbon technologies

Document or Iniciative

Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions – Investing in the Development of Low Carbon Technologies (SET-Plan) [COM(2009) 519 final – Not published in the Official Journal].

Summary

This Communication sets out the strategic energy technology plan (SET-Plan), the main aim of which is to develop low carbon technologies and to make them competitive. In order to meet that objective, the Plan proposes various European Industrial Initiatives and a risk sharing approach.

Which European initiatives are proposed?

Through the SET-Plan, the European Commission proposes to develop clean energy technologies and to put in place specific actions to establish a low carbon industry. The Commission therefore proposes to act in the fields of:

  • wind energy: the Commission wishes to build testing facilities and to set up demonstration projects. As a result of these projects, wind energy would contribute up to 33 % of electricity by 2030 and more than 250 000 skilled jobs could be created. The cost of these investments is estimated as EUR 6 billion.
  • solar energy: the implementation of the SET-Plan should equip the EU with a long-term research programme focused on advanced photovoltaic systems. In particular, the Commission proposes to create pilot plants for automated mass production and a portfolio of demonstration projects for both centralised and decentralised photovoltaic power production. These projects should allow 15 % of electricity to be generated by solar power in 2020 and create 200 000 skilled jobs. The cost of these investments is estimated as EUR 16 billion.
  • the electricity grid: the aim is to establish a sound basis for creating a real internal market, to increase the share of intermittent energy sources in total energy production, and to manage complex interactions between suppliers and customers. The goal is to connect 50 % of traditional electricity networks to plants generating renewable energy by 2020. It is estimated that EUR 2 billion will be needed to finance these networks.
  • sustainable bio-energy: there are several technologies. In order to enable them to be marketed, their effectiveness will have to be demonstrated. To do this, the Commission wishes to set up several such plants across Europe. The contribution made by these energies to the energy mix would be 14 % and 200 000 local jobs could be created. EUR 9 billion are needed to set up these projects.
  • CO2 capture, transport and storage: the development of these techniques should be encouraged in order to achieve low carbon electricity generation. Consequently, an increase in research in this field is planned. EUR 13 billion would need to be invested.
  • sustainable nuclear fission: a new generation of reactor type (Generation-IV) should be deployed by 2040 in order to reduce radioactive waste and proliferation risks. Work has to start now in order to meet that deadline. The cost of these investments is estimated as EUR 7 billion. In the long term, fusion also represents a promising source of energy.
  • fuel cells and hydrogen: this sector is already included in the Joint Technology Initiative (JTI) for 2008-2013, which has a budget of EUR 470 million. However, larger scale initiatives are still required.
  • energy efficiency: the Smart Cities Initiative aims at promoting the creation of market opportunities for energy efficiency technologies. Through an investment of EUR 11 billion, this initiative should make it possible, by 2020, to establish cities as nuclei from which energy efficiency technologies will spread. Smart networks, a new generation of buildings and low carbon transport solutions will be developed. The aim of these Smart Cities is to transform the energy system.
  • poles of science and research: the European Energy Research Alliance (EERA) should strengthen cooperation between research institutes in the context of joint research programmes. These research programmes should allow the challenges of the SET-Plan to be addressed.
  • international cooperation at the level of the G20 or bilateral agreements, such as the EU-China Near Zero Emissions Coal (NZEC) project.

How are these initiatives to be implemented?

The Commission estimates the investment required to apply the proposed initiatives at between EUR 3 and 8 billion. In the field of non-nuclear energy, the bulk of the funds (70 %) came from the private sector in 2007. It is now necessary to increase substantially the share of total investment coming from the public sector at national level and from the EU at European level.

In addition, banks and private investors should invest heavily in the companies which encourage their transition to a low carbon economy.

How can public funding for the implementation of these initiatives be obtained?

Several sources of public funding can support the development of the SET-Plan initiatives:

  • the emission allowance trading scheme which should generate income from 2013;
  • Community programmes such as the Framework Programme for Research, the Intelligent Energy – Europe programme and the European Energy Programme for Recovery;
  • lending by the European Investment Bank (EIB).

Context

The SET programme contributes to the energy and climate targets for 2020 and the longer term. It seeks to reverse the present trend in primary energy supply in the EU, which is currently 80 % dependent on fossil fuels.