Mobilizing Consumer Demand for Sustainable Investments in European Heavy Industry

Importance of Heavy Industry and Its Challenges

European heavy industry matters. Steel, chemicals, refining, and fertilizers support Europe’s growth. They provide the materials needed for construction, manufacturing, food production, and medicine. They create many good jobs in the EU.

Yet heavy industry adds to the EU’s greenhouse gas emissions and meets rising costs. Energy prices climb. Feedstock costs increase. Emission costs matter more. Low-cost imports press the market. These factors push plants to close or move production outside the EU. Competitiveness suffers.

The Role of Demand-Side Policies

A Deloitte report, built with industry voices, shows how demand-side policies help. They work to ease the pressure on EU heavy industry. They spark investments in cleaner production.

Why Is Additional Demand Creation Necessary?

• EU producers cut emissions, yet imports raise emissions elsewhere.
• Free allowances under the EU Emissions Trading System end soon. Producers then face higher costs and stronger import competition.
• The Carbon Border Adjustment Mechanism (CBAM) tries to keep costs equal. Still, some may evade it.
• Sustainable production costs more than usual methods. Market forces and new tech alone cannot fix this gap.
• Public subsidies and industry profits cover only a little of the needed investment.
• Without new funding or stronger demand, sustainable investments may pause. This pause can lead to more deindustrialization and more high-emission imports.

Impact of Pricing on Consumers

Sustainable materials like steel, plastics, and fertilizers rise in price. Still, they form a small part of the final product cost. Retail prices may climb by less than 1%. This small increase can drive big emission cuts without hurting affordability.

Toward a Conceptual Framework for Demand Mandates

The full report lays out strong ideas (not all detailed here). Deloitte and its partners stress that demand mandates must:
• Build a steady market for sustainable products.
• Encourage heavy industries to switch to low-emission technologies.
• Help balance EU climate goals with economic strength.

Conclusion

Mobilizing consumer demand for sustainable industrial goods is key. Clear and targeted demand-side rules can boost needed investments, cut carbon emissions, and keep the EU’s industry strong.

For further details, download Deloitte’s full report on Mobilizing Consumer Demand for Sustainable Investments [PDF 1MB].

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