European industry is going through a critical moment. The secondary sector of the Old Continent suffers from a loss of competitiveness due to its enormous dependence, excessive bureaucracy and lack of innovation in many respects. All this is noticeable in large economies. The PMI index of the Eurozone manufacturing sector went from 45.8 points in August to 45 in September, which determines a clear deterioration in what has been one of the key sectors of development in this geographical area.
But not only in the short term, assured this Wednesday the president of Repsol, Antonio Brufau, during the event. The industrial transition to Net Zeroheld at the Repsol Foundation, that the industrial sector went from 22% of GDP in 2010 to a weight of 17.5% in 2023. “A drop of two and a half points, while in the United States it went from 22% to 26%,” he recalled.
During a round table moderated by the journalist Carlos Franganillo, the director of the energy company, the CEO of CaixaBank, Gonzalo Gortázar, and the Minister of Industry and Tourism, Jordi Hereu, had a clear conversation: “ We need. “to reset Europe” and demanded “pragmatism and realism” from the political class at community level.
One of the points mentioned by Gortazar and Brufau was the high cost of energy. “European policy has led to very high energy costs and, consequently, a loss of competitiveness of the industry,” Brufau said.
In this sense, Gortázar reiterated that this generates “great uncertainty”, not knowing with certainty how these energy costs will evolve in future projects. This is why, from the point of view of project financing, “we need stability and confidence”, he reiterated.
Generally speaking, “Europe is losing the battle,” Brufau said. The official assured that the main obstacles to the competitiveness of European industry are the lack of “technological impulses” that help to innovate and improve the sector and make it more competitive. Also due to the enormous dependence, “we saw it with the invasion of Ukraine by Germany and Russia,” he recalled.
But not only that, but also critical materials needed for the energy transition. “The new economy is based on materials that Europe has little or no access to. The United States and China have some,” he recalled.
The truth is that rare earth elements, like lithium, are essential for making electric car batteries or solar panels. Most of the reserves are in these two countries as well as in Latin America, a market they are turning to a lot from Beijing. Argentina, Bolivia and Chile contain more than half of the world’s lithium. So much so that they are already colloquially called “the lithium triangle”. According to data from the United States Geological Survey, Bolivia leads with 21 million tons of lithium, followed by Argentina with 20 million and Chile with 11.
Finally, Minister Jordi Hereu and Burufau spoke of the development of a “genuine European defense market”. That’s to say, take the strategy that was adopted at the time with industries like Airbuscreating a consortium between countries and transferring it to the defense industry. This would really make this branch of the sector competitive with American industry.
Change of strategy
The main demands of the industrial and financial sector involve a change of strategy in which, in addition to an energy transition towards zero emissions, we also think about the process and the cost that this implies for companies.
At the same time, Gortázar and Burufau once again spoke of excessive regulation that prevents companies from doing a real transition and this delays funding, causing projects to drag out over time.
Finally, one of the things also mentioned by the director of CaixaBank is the opening of the capital market. “If the capital market is not big, we will be left behind,” he said. It is for this reason that he claimed this single capital market on the Old Continent.
“We have a lot of savings, but they are channeled into bank deposits, Treasury bonds and low-risk projects. We need savings that invest with more risk,” Gortázar reiterated.
The banker explained that when the projects are financed, “very notable uncertainties are generated” because the level of volume of demand that there will be is not known “and many of them are in an initial period and will be more expensive than alternative sources. I think we need to look for regulation that tries to provide stability and more confidence,” he said.
What is clear is that the energy transition is a reality, but it also promotes The secondary sector vilified in the Old Continent. The head of the Industry portfolio, Jordi Hereu, recalled that this is “a great political challenge that awaits us. If we fail to achieve the transitions, we will not only have economic problems, but also political. reiterated the minister.
In this sense, he announced that he hoped to implement this year the new law on industry, currently under consultation, since the current one, he recalled, “dates back to 1992”, which is why it is already considered obsolete in today’s times.
Transition without giving up
Brufau clarified that the company he heads “was the first in the sector to announce that it would be emissions neutral in 2050”, but stressed that the group “will not at all abandon the search for maximum value possible of its conventional assets”. , oil production and exploration, making them more efficient.
He reiterated that the two raw materials “are going to be in the energy matrix, whether we like it or not, for many years, because that’s the way it is,” he reiterated, referring to what the former Italian Minister Enrico Letta pointed out. in his report.
Although he reiterated that there are “a large number of opportunities” in the energy scenario to address the transition “in which Repsol wants to take center stage”, such as the circular economy, the production of biofuels for sectors that cannot be electrified or hydrogen.
Concerning the latter, he clarified that “it will not be for tomorrow” despite the fact that the PNIEC objectives are very ambitious for hydrogen, he clarified. “If we make a mistake, we will replace a vital energy, which is natural gas, with another which does not exist (today), which is hydrogen,” he recalled.
