The energy transition and digitalization have created a new playing field that forces all industries in the world to reinvent themselves to continue to be competitive. In Europe, industry is making multi-million euro investments that need to find a more suitable regulatory environment to be profitable and give a new boost to a sector that in Spain employs four million people.

"We are in a profound industrial transformation in which companies, regardless of the sector, have to undertake important investments that will transform not just the technologies that we use, but also the products we manufacture," explains Carlos Reinoso, spokesman of the Alliance for the Competitiveness of Spanish Industry, which groups together nine sectoral associations that generate 55% of the GDP and more than half of R+D+I investments. "In this context, in which decarbonization needs and promotion of the circular economy are intertwined, we are going to experience an exciting period in which we must create an environment capable of attracting the trust of investors and that happens, inevitably, by being competitive not only in domestic markets, but also in global markets."

At the end of February, the European Commission presented the Clean Industrial Deal, which aims to revitalize the industry without affecting the EU decarbonization objectives. To do this, Brussels proposes to reduce the cost of energy, subscribe trade and collaboration agreements with other countries to guarantee the supply of raw materials, boost the circular economy, and develop instruments to promote investments in the sector. In addition, the Commission takes a first step towards administrative simplification by reducing the number of European companies forced to submit reports on the sustainability of their activities by 80%.

In Spain, the Alliance for the Competitiveness of Spanish Industry considers that the effectiveness of the deal by Brussels can be conditioned by the will and commitment of the Member States, which are responsible for executing many of the proposed measures, such as the construction of trans-European transport networks to create a true unique energy market that lowers prices. "We consider it essential that the States, and Spain in particular, act with commitment, to prevent a competitive distortion from the EU given by the greater or lesser impulse that some countries give to the process," he explains from this entity.

Factors of competitiveness

For the European industry, the best way to revitalize the sector is to apply the proposals of the ex-president of the European Central Bank (ECB), Mario Draghi, who last year prepared a report on the competitiveness of the economy at the request of the Commission. Among other measures, Draghi proposed to reduce the volume of regulation, invest more in energy infrastructures, and promote technological innovation. In addition, he defended the need to apply the principle of neutrality in the energy transition, so that all technologies can play their role in the decarbonization of Europe's economy.

The European industry considers that the application of Draghi's proposals would mean a unique opportunity to reinvent its industry and prepare it to respond to the new needs of society. However, for these objectives to be achieved and for Europe not to lose ground globally, a determined approach and an effective implementation of the measures proposed by the EU is needed, with special attention to a series of factors that decisively influence the improvement of competitiveness in the sector.

First, the European industry needs legal certainty to undertake the huge investments that will be necessary in the coming years. "Industrial investments by nature have long return deadlines and that is why the certainty of the return of investment and its amortization is especially relevant," says the alliance spokesman on the importance of a stable regulatory framework that attracts investors. “You cannot change the rules of the game midway, as has sometimes happened so far. After all, what we need is to drive investment to ensure our own well -being and that has to include a framework that makes investments in risky or still-emerging technologies possible."

In addition to legislative stability, another key factor for improving competitiveness is the creation of an incentive framework that provides credit, aid, and tax incentives for industrial projects. In this regard, Brussels has committed to carrying out important collective investment work, which mobilizes both public and private funding, through the European Investment Bank and integrated European capital markets. In his report on The future of European competitiveness, Mario Draghi estimated the public-private investment necessary in terms of innovation, energy transformation, self-supply, and defense at 800 billion euros annually.

Europe also wants to reduce the bureaucracy that sometimes delays the launch of new industrial projects. The slowness or complexity of national, regional, and local paperwork to establish businesses, achieve environmental permits, connect renewable projects to the electrical grid, or process aid from the European funds is today one of the main difficulties to create a really competitive environment. "It is essential to simplify administrative paperwork that is stopping very important investments. It's not just about analyzing the companies that close, but the projects that are never carried out due to an unnecessary bureaucratic complexity," explains the spokesman of the Alliance.

But the horizontal vision of industry as a guarantor of the progress and well-being of European society is one of the matters that experts consider strategic to ensure competitiveness in such a changing world. "Industrial policy is everything. It is energy, work, transport, tax, raw materials (...), all government portfolios must think about industrial competitiveness," explains Carlos Reinoso. "Thinking about industrial competitiveness when legislating is becoming an inexcusable need, just like the analyses of environmental and gender impacts."

The application of these measures would contribute to making industry a stronger and more competitive sector. For now, the Commission has taken the first step by placing competitiveness as one of the pillars of its economic policy, aware of the need to strengthen its strategic autonomy and make Europe into a technological power. It will be the only way to promote the activity of European industry and meet the target of generating 20% of the EU's GDP.