The European Green Deal: Why it is a Big Deal for South African Manufacturers

The European Union (EU) aims to lead the third industrial revolution, with a focus on clean, renewable energy, renovating buildings for greener lifestyles, restoring nature, and enabling biodiversity and boosting global climate action by setting a positive example to international partners. 

The European Commission states that the European Green Deal will ‘transform the EU into a modern, resource-efficient and competitive economy, ensuring: 

  • No net emissions of greenhouse gases by 2050 
  • Economic growth decoupled from resource use 
  • No person and no place left behind’ 

Making Europe the first climate neutral continent in the world is the goal.  All 27 EU Member States have pledged to reduce emissions by at least 55% by 2030, compared with 1990 levels.  The aim is to do this by transforming the economy by creating new opportunities for innovation, investment, and employment.  Markets for clean products and technologies will be created, presenting opportunity for European industry. 

Sustainable transport is a key goal, with ambitious targets for reducing CO2 emissions from new cars and vans.  A target of 55% reduction of emissions from cars has been set for 2030, and 50% for vans. By 2035, the target is 0 emissions from new cars.  From 2026, emissions trading will put a price on road transport pollution.  The aviation and maritime sectors will be subject to carbon pricing. 

The late Dr Johan van Zyl, retired Toyota Motors Europe president and CEO, warned in June 2021 that ‘Europe’s Green Deal is not just a vision or idea, but a well-funded policy that is being implemented, and that is set to have a wide-ranging impact on South African exports’.  He goes on to explain that one of the instruments to achieve carbon neutrality will include the lifecycle assessment (LCA) of goods to determine their green credentials.   

‘Although this policy measure has not been finalised, the EU appears serious about its implementation’.  The EU is not likely to allow imports from countries that have not implemented green production, as this may place European manufacturers at a competitive disadvantage.  To note, the United Kingdom is South Africa’s biggest new-vehicle export market. 

The automotive sector is not the only sector to be impacted.  The same would apply to any product from South Africa.  The EU will assess whether imported goods were manufactured using green raw materials such as resin, steel, or aluminum.  Meaning these commodities were produced using renewable energy as opposed to coal-fired electricity and whether they were distributed using green transport. 

All South African sectors need to be aware of the LCA initiative, and not wait for it to be formally introduced.  By then the competitive advantage is lost against exporters who have implemented LCA measures.  The EU indicates that these will be World Trade Organisation compliant, meaning accessible and applicable here in South Africa. 

The entire supply chain has a role to play, from the mining sector at the source of commodity feedstock, through to the end consumer in Europe who will be reinforcing the Green Deal principles through demand for cleaner products.   

‘The world is not waiting for you’ said Dr van Zyl. ‘This is all about competition.  If we do not adjust, we’ll be excluded from the big markets in the world.  If you blink, someone will step into your position very quickly’. 

Does your firm consider green manufacturing to be a competitive advantage?  Have you taken the first steps to assessing the environmental impact of your production?  Our cluster Diagnostic tool is available to all members and provides an opportunity to assess your factory’s carbon footprint and how this compares with your competitors’.  Contact your cluster facilitator to sign up for your assessment.