A report by Deloitte, released ahead of an informal retreat of EU Heads of State in Alden-Biesen on February 12, identifies biomass use and material circularity as key levers to restore Europe’s industrial competitiveness.
Europe’s manufacturing sector remains under heavy strain, with production in 2025 down by up to 40% compared with 2018 and an estimated 200,000 jobs lost last year. Against this backdrop, the pulp and paper industry stands out as a relative stabiliser, despite facing its own cost and demand pressures.
Bioeconomy potential under pressure
Deloitte highlights Europe’s strong position in the bioeconomy, built on renewable biomass and established circular material flows. However, the report warns that regulatory complexity is eroding this advantage. The forest-based sector must comply with national frameworks alongside more than 100 EU-level regulations affecting biomass use.
Circularity also remains uneven. Paper collection and recycling systems vary widely across member states, limiting efficiency and scale.
High standards, weak market signals
While European industries operate under some of the world’s highest sustainability and labour standards, these are not reflected in market prices. As a result, fossil-based imports often compete on unequal terms. Deloitte supports carefully designed European preference and local content measures, particularly in public procurement, to strengthen critical value chains.
Decarbonisation funding gaps
The report also points to shortcomings in public funding for industrial decarbonisation. Revenues from the EU Emissions Trading System are not sufficiently redirected to support innovative projects. Better use of these funds could significantly accelerate progress toward 2030 climate targets.
Industry response
Reacting to the findings, Cepi Director General Jori Ringman noted that the European pulp and paper industry has already cut greenhouse gas emissions by more than 50% since 2005. He called on EU leaders to maintain current free ETS allocation levels for the sector and to freeze further carbon cost increases until 2030.
Deloitte concludes that Europe retains a competitive edge through biomass-based industries and circular systems—but only if regulatory clarity, market incentives and policy stability are restored quickly.
Source: Cepi
