Europe’s manufacturing sector is facing a deep structural crisis, with production levels having fallen by up to 40% in 2025 compared to 2018 and approximately 200,000 jobs lost in the past year alone. Within this challenging landscape, the pulp and paper industry – despite its own difficulties – has emerged as a relative stronghold, reinforcing the importance of sustainable and bio-based solutions to support Europe’s industrial competitiveness.
A new report by Deloitte, unveiled ahead of the informal retreat of EU Heads of State in Alden-Biesen dedicated to addressing Europe’s declining competitiveness, identifies biomass utilisation and material circularity as decisive factors capable of strengthening the continent’s industrial base. However, without immediate and targeted policy action, Europe risks forfeiting its leadership in the bioeconomy.
Biomass and circularity as strategic assets
The report underlines that EU legislation continues to create significant obstacles for biomass-related industries. While the forest sector is primarily governed by national legislation and certification schemes, it must also comply with more than 100 EU regulations, adding complexity and administrative burden that constrain development.
Material circularity – particularly the collection of paper for recycling – remains highly fragmented across Member States. This lack of harmonisation raises serious concerns about Europe’s ability to fully leverage one of its strongest competitive advantages in the transition towards climate neutrality.
High standards, limited market recognition
European industries operate under some of the highest global standards in sustainability, carbon footprint reduction, labour conditions and innovation. Nevertheless, these standards are not adequately reflected in market demand or pricing mechanisms. Fossil-based products and materials, often imported from outside Europe under lower environmental and social requirements, continue to compete on an uneven playing field.
The industry therefore supports the introduction of carefully designed local content and European preference criteria in public procurement and strategic value chains. Such measures are seen as instruments to reinforce resilience, safeguard critical value chains and strengthen Europe’s strategic autonomy, while ensuring coherence with internal market rules.
Public funding instruments and ETS revenues
The Deloitte analysis also points to shortcomings and excessive complexity in public instruments intended to finance innovative industrial decarbonisation projects. One key issue identified is the insufficient redistribution of revenues generated under the EU Emissions Trading Scheme (ETS).
According to the report, a more effective allocation of ETS revenues by Member States could represent a “game changer” for industry, significantly enhancing its capacity to meet stringent decarbonisation objectives by 2030.
Industry call for policy stability
Cepi reiterated the urgency of ensuring regulatory stability and cost predictability. “The European pulp and paper industry has already reduced its greenhouse gas emissions by more than 50% compared to 2005 levels.” “But in the current context of high energy prices, low demand, high costs and an ongoing trade war, we have no choice but to ask the EU Heads of State assembled in Alden-Biesen to maintain free allocation levels and the eligible pulp and paper installations list of the 2021-2025 period and freeze any measures increasing carbon costs until 2030.”
The statement reflects mounting concern across Europe’s industrial landscape that without rapid intervention on energy costs, carbon pricing and trade conditions, the continent’s manufacturing base could face further irreversible erosion.
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