The European Commission’s forthcoming texts to strengthen the EU’s competitiveness in the green transition (see EUROPE 13135/1, 13137/1) raise high expectations among Member States and stakeholders. EUROPE asked Markus Beyrer, Director General of BusinessEurope, the association representing European business, about the industry’s demands to become more competitive. (Interview by Léa Marchal)
You have just published a Competitiveness Action Plan (see EUROPE 13140/12), in which you urge the EU to “make Europe the place to do business again”. What is the main problem in that field, according to you?
I think we’re in a situation where we have a very difficult mix of things. I've been doing this work for a while, on different levels, and I've never seen a situation where so many companies are considering investing elsewhere. This does not mean that all this will happen, but it is a situation where the risk of deindustrialisation is real.
We have this war which is really an asymmetric shock because of course we are much more hit by the cost of energy. So that’s pushback number one.
The second is that everything takes too long in the EU. By this I mean that companies tell me, for example: “I have a project somewhere in the North Sea. It has been under discussion for seven years. I have the same project in Georgia, eight months later it is in operation”. As far as speeding up the authorisation procedures and energy costs are concerned, however, I think this is something that is at least beginning to be recognised. So that’s positive.
Then we have a third pressure factor - and this is the most difficult one - which is the accumulation of regulatory burden, the fact that companies are strangled by too much regulation. And the reason why we are putting our finger on it is that, at the moment, we don’t feel that it is really recognised.
In addition to these three factors, the American Inflation Reduction Act is obviously a pull factor.
Can you name pieces of legislation that hinder enterprises' competitiveness?
A first example is the administrative barriers around posted workers. For a person going to work for two days or even for a business trip, an A1 form is needed. We believe that for short-term postings and business trips, this A1 form should not be necessary.
Another point concerns tax returns. Over the past twelve years, eight additional initiatives have been taken, including on the cross-border situation, and more are being announced. We now have in the pipeline the Industrial Emissions Directive, about which we have said that this is something we should not propose now, because the existing directive is already working.
And then there are huge overlaps with ESG (environmental, social and governance) reporting requirements. If I look at the combination of the CSRD, the Taxonomy Regulation, and now the Corporate Sustainability Due Diligence Directive, we have a multitude of disclosure requirements that often deal with the same subject. The auditing specialist PwC says it will need to hire 100,000 new sustainability accountants by 2026 to manage all of this.
What do you think of the ‘regulatory sandboxes’ that allow companies to innovate in a lighter regulatory environment and which should also be included in the ‘net zero’ industry regulation?
It makes a difference and we have always pushed for it. But of course, it helps in some specific areas. It's not something that will totally change the world, but it can really help in the early application so that you don't need to apply everything under very close conditions. But it is not something that can replace the more transversal instruments that we need overall.
Do you think that the acceleration of authorisation procedures for clean technology projects - as foreseen in the ‘Net-Zero Industry’ act - will have a significant impact on companies’ decision to invest in the EU?
I think it is positive that there is recognition that there is a problem with speed. It would also be good to say that if a response to a project is not given within nine or twelve months, it should be considered approved, because this really puts pressure on the authorities. We now need to see the details. For instance, if there are many exceptions listed where the accelerated procedure doesn't apply, then we need a concrete impact assessment to see what the degree of acceleration would actually be.
As regards subsidies to the private sector,how do you evaluate the temporary crisis and transition framework (TCTF) on state aid rules proposed by the European Commission?
We are still assessing the details of the temporary crisis and transition framework, but at first sight we think the balance is relatively good. Some short-term flexibilities are needed to react in specific cases, but without going too far, as a balance must be found with the protection of the integrity of the single market.
We still don’t think that we can build our long term competitiveness on subsidies. We need to look structurally at how to improve our energy situation, how to move faster, how to reduce the regulatory burden, etc. We recognise that in the short term, actions are needed to counter some of the things that are happening in the world. But we must not believe that this is the main driver of our competitiveness in the future.