The Greening of Europe’s Chemical and Construction Sectors

On April 11, 2022, the EU chemical industry officially embraced the development of a chemical Transition Pathway to support its own successful transformation in terms of fulfilling the EU’s Green Deal objectives, which include no net emissions of greenhouse gases by 2050, economic growth through a decoupling from the use of primary raw materials and
greater digitalization.

For many at the top of the chemical industry, the timing could not be better; they cite the need for innovation and new technologies as awareness of the finite nature of resources grows ever stronger.

The recent COVID pandemic has delivered several curve-ball statistics into the EU’s hands, in terms of turnover and investment collapses, internal trade and job losses. It has also thrown into sharp relief the bloc’s interdependencies upon other regions in terms of raw material supplies, particularly for critical industries.

The outlook for the global raw materials sector is very tight: extraction of raw materials around the world has doubled since 1990 and consumption is expected to grow by a further 40% by 2040. As Europe will be required to compete with the U.S. and China for its share of raw materials, clearly some concepts of alternative thinking (greenness, recycling and re-use) and back-to-the-drawing-board technologies are to be welcomed.

These long-term changes, however they turn out, will be self-supporting for the European chemical industry and potentially very good for the paint and coatings industry.

European companies are already light years ahead of the U.S. and Asia in terms of bio-based and sustainable chemistries, and as more experience is gathered by industry and more substitutions find their way into downstream applications, the EU chemical sector will become increasingly self-sufficient.

Certain interdependencies will not be easily overcome. The EU has learned the significant roles certain compounds and chemical elements play in supporting critical industries (e.g. clean energy, electric vehicles and digitalization). Of especial importance to the coating sector and its suppliers would be the sourcing of barytes, bismuth, cobalt, titanium and vanadium. In particular, China holds a key role in supplying European industry1: it supplies 49% of European bismuth consumption, 45% of its titanium, 39% of its vanadium consumption and 38% of its barytes. To this end the EU is encouraging the formation of alliances to ensure steady supplies of critical raw materials from external sources.

Moreover, as competition for critical raw materials grows, the EU will be forced to look deeper into its own countries to satisfy its metal and mineral requirements. Europe has a long history of extractive industries and is home to many zinc and copper sources; an EU-wide review of deposits that it might tap would be especially beneficial to countries such as France, Portugal, Sweden and Finland. Despite the significant potential that these sources could bring in reshaping the EU chemical industry from within, it will remain a considerable challenge to actually exploit these resources, not least because mining projects are unpopular with locals.

Matters of Circularity And Sustainability

Through the European Green Deal’s Circular Economy Action Plan, there are aims that will decouple industry from relying on new resources by placing emphasis on sustainable product design. Circularity and recycling of raw materials from low-carbon technologies will become an integral part of the transition to a climate-neutral economy. Longer product lifetimes and the use of secondary raw materials, through a robust and integrated EU market and retention of value of high-grade materials, will help to cover a growing share of the EU’s raw materials demand.

At the end of March, the European Commission set out proposals2 to make almost all physical goods sold in the EU market more environmentally friendly, circular, and energy efficient throughout their whole lifecycle from the design phase through to daily use, repurposing and end-of-life.

The Commission also presented a new strategy to make textiles more durable, repairable, reusable and recyclable, to tackle fast fashion, textile waste and the destruction of unsold textiles, and ensure their production takes place in full respect of social rights.

A third proposal aims to boost the internal market for construction products and ensure that the regulatory framework in place is fit for making the built environment deliver on sustainability and climate objectives.

Finally, the package includes a proposal on new rules to empower consumers in the green transition so that consumers are better informed about the environmental sustainability of products and better protected against greenwashing, which is an area that was recently addressed in the UK by the British Coatings Federation.

Detail on the Construction Sector

Concerning construction products, the construction “ecosystem” represents almost 10% of EU value added, and employs around 25 million people in more than five million firms. The construction products industry counts 430,000 companies in the EU, with a turnover of €800 billion. These are mainly small and medium-size enterprises. They are a key economic and social asset for local communities in European regions and cities.

Buildings are responsible for around 50% of resource extraction and consumption and more than 30% of the EU’s total waste generated per year. In addition, buildings are responsible for 40% of EU’s energy consumption and 36% of energy-related greenhouse gas emissions.

The revision of the Construction Products Regulation will strengthen and modernize the rules in place since 2011. It will create a harmonized framework to assess and communicate the environmental and climate performance of construction products. New product requirements will ensure that the design and manufacture of construction products is based on state of the art to make these more durable, repairable, recyclable and easier to re-manufacture.

It will also make it easier for standardization bodies to do their work of creating common European standards. Together with enhanced market surveillance capacities and clearer rules for economic operators along the supply chain, this will help to remove obstacles to the free movement of the internal market. The revised regulation will also offer digital solutions to reduce administrative burdens.

Capitalizing on Digitalizing

With regard to digitalization, this is clearly a growing trend within industry but for many it’s not happening quickly enough. Hooks into digitalization such as artificial intelligence (AI), the internet of things (IoT: sensors, software, technologies, apps etc), 5G and 6G networks are all ways in which the EU sees greater advances for industry.

While one can appreciate the potential applications that this means for the chemical industry in terms of safety, labeling, transportation etc., it also represents a way for the EU to help develop further its own computing industry, especially in areas such as cloud computing for data storage.

According to Eurostat, only 36% of EU companies use cloud computing services; Europe’s presence in the sector is already limited, as cloud services are dominated by Microsoft, Google, Amazon and Alibaba. As it stands, the largest EU-based cloud provider accounts for less than 1% of total revenues; this is a scenario where the EU is trailing a long way behind the U.S. and China which, on average, invest €11 billion a year more.

For European businesses, there is a reluctance to employ non-European cloud services due to data protection and cybersecurity concerns. This therefore represents a potential win-win scenario for both Europe’s IT industry and all other European industries too. CW

References

1. https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:52020DC0474&from=EN
2. https://ec.europa.eu/commission/presscorner/detail/en/ip_22_2013