Major industrial and fossil fuel firms, including Shell, BP, and Tata Steel, are pressing European leaders to implement measures that would encourage consumers to choose less polluting products. They argue that such steps are essential to attract more investment for the energy transition.
In a letter addressed to the European Commission, these companies highlighted that businesses aiming to adopt production methods with lower carbon emissions are struggling with high costs, making it hard to compete. They assert that government intervention is needed to create demand for sustainable products.
The letter, intended for EU climate commissioner Wopke Hoekstra, warned of a potential “industrial exodus” if no action is taken. The signatories noted that combustion and industrial activities contribute significantly to global CO₂ emissions, stressing the need for a clear strategy for the oil and gas industry to reduce its carbon footprint.
The European Commission is currently seeking to stimulate investment in green energy sectors, particularly given concerns related to economic decline. The EU has reportedly cut its emissions by about 37% since 1990 through increased reliance on renewable energy sources like solar and wind. However, challenges remain in shifting away from fossil fuels in various industrial sectors.
A recent report from former European Central Bank President Mario Draghi suggested a new industrial strategy to keep Europe competitive with the US and China. However, proposals for mandatory measures may raise concerns about increasing costs for consumers, especially following recent economic pressures linked to the pandemic and the conflict in Ukraine.
In addition to introducing a carbon border adjustment tax to protect local industries investing in low-carbon practices, the signatories contend that these efforts fall short as they primarily address raw material imports, leaving out finished products. They pointed to existing mandatory regulations, such as requirements for suppliers to provide a certain percentage of sustainable fuels.
Companies are proposing that mandates could extend to products like cleaner plastics, synthetics, rubber, steel, and various building materials. This letter also includes support from biofuel producers and major energy groups across Europe.
The companies expressed that the current business model in the European industry is under pressure and that they cannot bear the high additional costs associated with sustainability on their own.