The European Commission's initiatives aimed at tackling the dramatic energy crisis that Europe is facing are lacking in ambition—those will come at the cost of losing European industrial capacity and European jobs, EURATEX has warned.
- Ultimately, Europe will remain without its integrated textiles ecosystem, as known today, and no means to translate into reality the EU Textiles Strategy, for more sustainable and circular textiles products.
The issue of price cap: On 14 September 2022, on the occasion of the State of the Union address by President Von der Leyen, the Commission announced initiatives aimed at tackling the dramatic energy crisis that Europe is facing.
- EURATEX welcomed these proposals by the Commission to change the TTF benchmark parameters and decouple the TTF from the electricity market and the revision of the merit-order principle for the electricity market, which is no longer serving the purpose it was designed for.
- [The Title Transfer Facility, more commonly known as TTF, is a virtual trading point for natural gas in the Netherlands. This trading point provides facility for a number of traders in Netherlands to trade futures, physical and exchange trades ]
However:
- An ambitious and meaningful European price cap on the wholesale price of natural gas is absolutely necessary. Europe is running out of time to save its own industry. It is now time to act swiftly, decisively in unity and solidarity at European level.
- A very high price cap has been so far discussed among ministries and that is not reassuring for companies across Europe: if any cap is, as expected, above 100/MWh, these businesses will collapse.
- Already in March 2022, with EU gas wholesale prices at 200€/MWh, the business case for keeping textiles production was no longer there. To date, natural gas wholesale prices have reached the level of 340€/MWh, more than 15 times higher compared to 2021.
- Currently, many businesses have suspended their production processes to avoid the loss of tens of thousands of euros every day.
- It is not possible to just pass on the increased costs to consumers. Yet, with these sky-high prices, European companies cannot afford to absorb those costs. The EU textiles companies are mainly SMEs that do not have the financial structure to absorb such a shock.
- In contrast, the wholesale price of gas in the US and China is 10€/MWh, whereas in Turkey the price is 25€/MWh.
The EURATEX warnings:
- We hope this will not become the new normal and—to reduce the likelihood of such a scenario—we call on the Commission, the EU Council and the Parliament to swiftly adopt decisive, impactful and concrete actions to tackle the energy crisis and ensure the survival of the European industry.
- If the EU does not act, our international competitors will easily replace us in the market, resulting in the de-industrialisation of Europe and a worsened reliance on foreign imports of essential products.
Specific segments particularly vulnerable:
- The man-made fibres (MMF) industry for instance is an energy intensive sector and a major consumer of natural gas and electricity in the manufacturing of its fibres. Not only is it being affected by higher energy processes, it is also experiencing shortages and sharply rising costs of its raw materials.
- For the nonwovens segment, production processes—which use both fibres and filaments extruded in situ—are also highly dependent on gas and electricity. Polymers melting and extrusion, fibres carding, web-forming, web-bonding and drying are energy-intensive techniques. Nonwoven materials can be found in many applications crucial to citizens like in healthcare (face masks) or automotive (batteries).
- For some segments the use of gas has no technological substitute: for example, the dyeing and finishing production units make very intense use of gas. These production units are mainly composed of boilers and driers, which only work on gas and there is no alternative technology.
- The textiles services sector is also struggling: with the critical nature of the service they provide, they require a considerable amount of energy to keep services, particularly hospitals and care homes stocked with lifesaving material as well as clothing and bed linens for the patients themselves. Losing these businesses would cause a lack of clothing for healthcare professionals, including protective sanitary gowns for surgeons, nurses and doctors, uniforms including other forms of personal protective equipment.
