EU business group voices ‘sympathy’ for moratorium on green laws

Pictured: BusinessEurope director Markus J. Beyrer. Image: BusinessEurope

Unveiling its summer 2022 economic outlook last week (7 July), BusinessEurope sounded the alarm bell: the EU “is facing a very difficult period” with high energy costs and the war in Ukraine threatening to send the economy into recession.

“It’s a very tough situation we’re heading into,” said Fredrik Persson, a Swedish business executive who succeeded Pierre Gattaz as President of BusinessEurope on 1 July for a two-year period.

“I haven’t seen these types of uncertainties in my whole career,” said the business executive, a board member of six companies, including white goods manufacturer Electrolux and the holding company of Swedish furniture giant Ikea, Interogo Holding AB.

Clouds are gathering over the EU’s economy, with the euro nearing a two-decade low against the dollar last week as Europe’s energy cost squeeze cast a long shadow over the bloc’s economic outlook. The latest economic forecast from BusinessEurope points to a 2.6% growth rate in 2022, which is “a downward revision of 1.3%” from its previous Autumn forecast.

“But ‘within year’ growth in 2022 is expected to be just 0.6%, raising the prospect that individual member states may experience at least ‘technical recessions’ during 2022,” the business association warned in a statement.

With the threat of recession looming large, the EU’s employers’ group is calling on policymakers to hold off on green legislation to ease the pressure on EU businesses.

“We should be careful adding regulatory burden in the troubling times that we’re in now,” Persson said, reminding the European Commission to “always do a competitiveness check” before putting new laws on the table.

And if it does decide to legislate, the EU executive should strictly observe its own ‘one in, one out’ principle whereby new rules are offset by removing equivalent regulatory burdens in the same policy area, Persson added.

“And if you can do ‘one to one’, honestly you can do ‘one to two’,” he added.

EPP group in Parliament calls for ‘regulatory moratorium’

In the European Parliament, conservative lawmakers have pushed this logic one step further by calling for a “regulatory moratorium” on green legislation after the EU passes the current ‘Fit for 55’ package of climate legislation.

Christian Ehler, a German MEP with the centre-right European People’s Party (EPP), said this has been “a standing plea” from the EPP in discussions with the European Commission, which has the exclusive right to table legislation on behalf of the EU.

“We have been asking the Commission to consider a regulatory moratorium” for some industrial sectors until 2030, Ehler told journalists during a press conference on 15 June about the reform of the EU carbon market, the Emissions Trading Scheme.

“We have to adapt to the realities of industry,” he said, calling on the European Commission to perform economic impact studies for individual sectors like plastics or chemicals, which are directly affected by EU climate laws.

Ehler insisted that European industry supports the green transition, with many companies already leading the way and embracing change as an opportunity.

“But what the industry has been asking us is to make [the green transition] feasible” for them and give them “breathing space for investment,” the German MEP added, saying European companies are facing unprecedented uncertainties.

“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 ambition. And on the other hand, we are confronted with war. And thirdly, we are still in the aftermath of an economic crisis after Corona where global markets are disturbed, and supply chains still don’t work,” Ehler explained.

Amid this uncertainty, Ehler said the EPP’s objective was to “make it feasible for industry and for the economy to deliver” on the EU’s green objectives.

No more ‘extra bureaucracy or burden’, BusinessEurope insists

Ehler’s remarks echo the dominant sentiment at BusinessEurope. Companies across the EU are currently struggling with “components shortage,” “broken supply chains” after covid-19, and the risk of a “damaging wage-price spiral” caused by inflation, Persson warned.

With the current high uncertainty, “I don’t think there is a single board room now where investments are not being reconsidered,” he pointed out.

Markus J. Beyrer, director-general of BusinessEurope, put it more bluntly: “We should not impose extra bureaucracy or burden, in a situation where companies are struggling, when it’s not necessary,” he said.

Yet, the EU employers’ organisation stopped short of formally endorsing the EPP’s call for a regulatory moratorium on green EU laws. “We don’t have a BusinessEurope position to say we formally support this EPP moratorium,” Beyrer replied when asked by EURACTIV.

“But we certainly have sympathy for it,” he added.

Beyrer cited the revised Industrial Emissions Directive as an example of unwelcome regulation. “Why does this fall on our head, creating insecurity, when we don’t need it?” he asked.

“It comes at the wrong moment and will inevitably make industrial activities more complex at a time when we need the opposite,” the group said in a statement posted earlier this year.

Another example is the upcoming revision of the REACH regulation on chemicals. According to BusinessEurope, the regulation will not only affect the chemicals industry but also “many downstream sectors like transport, electronics or textiles, which depend on chemical products”.

“Obviously, there is the big question as to whether this is necessary at this moment in time,” Beyrer said.

How the REACH revision is managed could have far-reaching consequences for EU companies, he warned. “It could mean that you take 12,000 chemicals out of the market, but it can also mean it’s 1,500 or 1,100. And this would make a hell of a difference, of course, for value chains which are already in a very difficult situation.”

“So if you ask me, maybe it’s not the best moment to propose such a piece of legislation,” he said.

Yet, BusinessEurope rejects any suggestion that it is opposed to the EU’s green agenda, which Commission President Ursula von der Leyen positioned as Europe’s “new growth strategy”.

“We fully support the Green Deal, we fully support the ambition,” Beryrer said. “But we need to find a way to do this to decarbonise Europe without de-industrialising.”

“I think business honestly, in many senses, are running ahead of the politicians now. And I see businesses transforming at a very fast pace,” Persson added when asked about his views on the EU’s 2030 climate goals.

Even so, BusinessEurope’s support for the EU’s climate plan probably came half-heartedly at best.

When the Commission presented more ambitious climate targets for 2030 two years ago, the employer’s association questioned: “the value and credibility” of the economic analysis underpinning the proposal.

Two years before, a leaked internal memo revealed the association’s plans to “oppose” any increase in the EU’s climate ambition for 2030 by “using the usual arguments” that Europe needs to get China and the US on board first before taking any “unilateral” action on climate policy.

EPP campaign

BusinessEurope has since toned down its opposition to climate policy. But the EPP seems to have picked up the baton by making it clear that the moratorium on green EU laws was going to be a recurring theme for them.

“That will be now the continued work for the EPP” after the ‘Fit for 55’ package of legislation is adopted, said Esther de Lange, a Dutch Christian Democrat MEP who spoke alongside Christian Ehler at the June press conference.

“Green is not only about putting targets into legislation,” she said, insisting that EU climate legislation “doesn’t happen in a vacuum” and has deep consequences for business.

Europe, she added, also needs “an industrial policy that actually makes sense and makes sure that the cleanest and most innovative industries stay in Europe and keep providing jobs”.

“The EPP will be pressing the European Commission on this, so this isn’t the last time you’re seeing us, I’m afraid,” de Lange said.

Frederic Simon, EurActiv.com

This article first appeared on EurActiv.com, an edie content partner