Interview with Dirk Vantyghem, Euratex
Dirk Vantyghem (Source: Euratex)
The current energy crisis is impacting on the competitiveness of the European textile and clothing industry. Because there are limited alternatives to the use of gas in different parts of the production process, production costs are increasing sharply.
Could you briefly explain Euratex's current commitment to support the European textile and apparel industry in the face of soaring energy prices?
The current energy crisis and sky rising energy and CO2 prices are putting a high strain on the textile sector, so much that some companies have temporarily halted their operations. At the peak of the crisis, costs of gas have increased from €20/KWh to over €300/KWh: an increase of 1,500% that is impossible to pass onto customers due to the high global competitiveness of the industry. The share of energy in the total production cost has increased from 3-4% to 25%.
Euratex is calling for the European Union (EU) and Members States to support European economies and industries in reducing the impact of the sudden increase in energy prices. Suggested actions would be for companies to access energy at reasonable prices – through subsidies, by removing environmental levies, or VAT from bills and price caps. On March 23, 2022, the European Commission has presented a framework that will allow Member States to deploy state aid measures; Euratex is ensuring that such measures do not only benefit energy intensive sectors – such as steel, cement or fertilizers – but also specific segments of the textile value chain, especially finishing, dying, production of nonwovens and manmade fibers. We are partially successful, even if the final decision to support the industry rests with individual member states. That may lead to a distortion of competition within the EU, which should be avoided. An EU-wide cap on gas prices of €70/kWh would be a better solution.
Additionally, Euratex is working together with the European Commission to promote policies such as RePowerEU: to diversify gas supplies, speed up the roll-out of renewable energy sources and replace gas in heating and power generation. RePowerEU focuses on Europe becoming less dependent on supplies from non-EU countries and put green energy on the fast track. Of course, this is a long-term process.
The current energy crisis and sky rising energy and CO2 prices are putting a high strain on the textile sector, so much that some companies have temporarily halted their operations. At the peak of the crisis, costs of gas have increased from €20/KWh to over €300/KWh: an increase of 1,500% that is impossible to pass onto customers due to the high global competitiveness of the industry. The share of energy in the total production cost has increased from 3-4% to 25%.
Euratex is calling for the European Union (EU) and Members States to support European economies and industries in reducing the impact of the sudden increase in energy prices. Suggested actions would be for companies to access energy at reasonable prices – through subsidies, by removing environmental levies, or VAT from bills and price caps. On March 23, 2022, the European Commission has presented a framework that will allow Member States to deploy state aid measures; Euratex is ensuring that such measures do not only benefit energy intensive sectors – such as steel, cement or fertilizers – but also specific segments of the textile value chain, especially finishing, dying, production of nonwovens and manmade fibers. We are partially successful, even if the final decision to support the industry rests with individual member states. That may lead to a distortion of competition within the EU, which should be avoided. An EU-wide cap on gas prices of €70/kWh would be a better solution.
Additionally, Euratex is working together with the European Commission to promote policies such as RePowerEU: to diversify gas supplies, speed up the roll-out of renewable energy sources and replace gas in heating and power generation. RePowerEU focuses on Europe becoming less dependent on supplies from non-EU countries and put green energy on the fast track. Of course, this is a long-term process.
The European industry is heavily dependent on natural gas. Is it possible to reduce this dependency? What is being done here?
In several stages of its supply chain – such as fiber production, spinning, weaving, production of nonwoven fabrics, or finishing – the textile industry is heavily dependent on the use of fossil fuels and electricity. In fact, the technology used in these parts of the supply chain are only available through the use of electricity while viable alternatives – such as green gas or green hydrogen – are at the moment still not available.
So, despite the many efforts over the past decades to lower the use of fossil fuel and electricity, further results can only be achieved by improving energy efficiency through investments in developing more energy efficient industrial technologies and machineries. Euratex is hoping to develop a “decarbonization pathway” for the industry in the coming months.
In such a competitive environment as the textile sector, characterized by small and medium enterprises (SMEs), this kind of investments are difficult to be sustained; Euratex is calling for the support of the European institutions through a close dialogue between the legislators and the industry.
The global textile industry is considered one of the world's biggest polluters and accounts for 10% of global carbon emissions. What does the path toward climate neutrality look like?
Along with the European Commission’s European Green Deal objective to create a modern, resource-efficient and competitive economy, the textile industry recognizes that protecting the environment is one of the most important challenges of our times. Over the past 20 years, the European textile industry has reduced the high intensity use of fossil fuel energy by more than 60%. However, because the European consumption of textiles has the 4th highest impact on the environment and climate change – after food, housing and mobility – Euratex acknowledges that much still needs to be done.
Euratex is working together with the European Commission, on an EU Strategy for Sustainable and Circular Textiles within the framework of the European Circular Economy Action Plan. The strategy aims to:
- increase the EU textiles ecosystem’s resilience;
- boost its attractiveness, creative and innovative potential;
- tap into new markets for sustainable textiles;
- create new jobs in the textile circular economy.
In the long run, Euratex further supports all efforts to move towards green energy and a climate neutral economy. Such transformation will require access to very significant amounts of renewable energy at competitive prices both at European and national levels. The EU and Member States will then need to further invest in new infrastructures and services.
Beside focusing on improving energy efficiency, more can be done to decrease the textile industry ecological footprint: for example, by using new bio-degradable materials, and focus on the “smart” designs that can improve the quality and durability of the product as well as facilitate its re-use or recycling.
Although many interesting initiatives are currently being developed across the industry, further investment in research and innovation is needed while improving cooperation and collaboration within the value chain, especially between retailers and producers. A clear regulatory framework is essential: setting the standard for what is a sustainable product and indicating the careful management of textile waste.
Will the drive for more sustainable and carbon-neutral production affect the competitiveness of our industry?
Euratex is committed to ensure that the need for a more sustainable and carbon-neutral textile production must not affect the competitiveness of the industry. This transformation must happen within the broader global environment, which is characterized by fierce competition. Solutions must first acknowledge the current global market dynamics and prevent potential carbon leakages; effective market surveillance is necessary, to ensure that all products which are placed on the EU market comply with the relevant legislation and standards. Euratex is co-managing a pilot project (REACH4Textiles) focusing on compliance with the REACH regulation; this can be a useful first step to be further developed.
The design of policy options linking the trade and climate agendas must strike a careful balance between ensuring a global level-playing field to support European competitiveness and enhancing access to foreign markets while effectively complementing domestic climate-related measures. Euratex believes that the European Green Deal must take a systematic and holistic approach to the trade and climate agenda, where the sustainability triangle of climate action, competitiveness, and security of supply of energy and critical resources remains central.
What are the other biggest challenges currently facing the European textile and apparel industry?
Apart from the energy crisis mentioned before, the biggest challenge for our companies is to prepare for that green and digital transition. Euratex has launched the development and set up of the European Textile Recycling Hubs (ReHubs): a joint initiative for industrial upcycling of textile waste streams and circular materials. In the area of skills, Euratex together with representative associations of the European Footwear and Leather industry implemented the Skills4SmartTCLF project: an Erasmus+ project funded by the European Commission aiming to enhance the modernization and competitiveness of the EU Textile, Clothing, Leather, and Footwear (TCLF) sectors through the development of a sustainable upskilling and reskilling strategy.
Where do you think the European textile and apparel industry will stand in the next 5-10 years in international comparison?
The EU Textile Strategy, mentioned above, is giving the right orientation for our industry: promoting high quality and durable textile products, increase transparency across the value chain, ensure fair global competition…all these are values which Euratex can support, and offer great potential for our companies.
However, making that transition will be a delicate process, requiring time and support. In essence, we must reconcile sustainability, resilience and global competitiveness – not easy to square that circle. But if we can develop the right policy framework, based on a close dialogue with the EU regulator, we believe our industry has huge opportunities ahead. That is Euratex’s ambition for the years to come.
The interview was conducted by the TextileTechnology team with Dirk Vantyghem, Director General of the European Apparel and Textile Confederation (Euratex), Brussels/Belgium.
