Last month, when wholesale natural gas prices reached record levels of €340/MWh – also triggering excessively high electricity prices – the European textile industry called on the European Union to adopt a wholesale cap on natural gas, the revision of the meritocracy principle in the electricity market, support for SMEs and a single European strategy. On 14 September 2022, on the occasion of President Von der Leyen’s State of the Union address, the Commission announced initiatives aimed at tackling the dramatic energy crisis facing Europe.
We, the European associations representing the entire textile ecosystem, welcome these Commission proposals to change the TTF benchmarks and decouple the TTF from the electricity market and to revise the value chain principle for the electricity market, which it is no longer serving the purpose for which it was designed.
We also welcome the proposal to amend the State aid framework which, in our view, should include the textile finishing, textile services and non-wovens sectors, as well as the simplification of application requirements. In addition, we call for uniform application across the EU.
However, we recognize that the Commission’s proposal lacks ambition and – if confirmed – will come at the cost of the loss of European industrial capacity and European jobs. Ultimately, Europe will be left without its integrated textile ecosystem as we know it today, and without any way to translate the EU textile strategy into reality for more sustainable and circular textiles.
An ambitious and meaningful European price ceiling on the wholesale price of natural gas is absolutely necessary. Europe is running out of time to save its industry. It is now time to act quickly, decisively with unity and solidarity at the European level. We understand that a very high price cap has been discussed so far between the Ministries and this is not reassuring for companies across Europe: if any cap is, as expected, above 100/MWh, these businesses will collapse.
Already in March 2022, with wholesale gas prices in the EU at €200/MWh, the business case for maintaining textile production no longer existed. Until today, the wholesale prices of natural gas have reached €340/MWhmore than 15 times higher compared to 2021! Currently, many businesses have suspended their production processes to avoid losing tens of thousands of euros daily. We hope that this will not become the new normal and – to reduce the likelihood of such a scenario – we call on the Commission, the EU Council and the Parliament to quickly adopt decisive, effective and concrete actions to tackle the energy crisis and ensure survival of European industry.
Given the fierce international competition in which the EU textile industry operates, it is not possible to simply pass on the increased costs to consumers. However, with these extremely high prices, our companies cannot afford to absorb these costs. EU textile companies are mainly SMEs that do not have the financial structure to absorb such a shock. In contrast to this reality in Europe, the wholesale price of natural gas in the US and China is €10/MWh, while in Turkey the price is €25/MWh. If the EU does not act, our international competitors will easily replace us in the market, de-industrialising Europe and increasing dependence on foreign imports of essential products.
Specific sections of the textile industry are particularly vulnerable:
- The man-made fiber (MMF) industry for example is an energy-intensive industry and a major consumer of natural gas and electricity in the manufacture of its fibers. Not only is it affected by the higher energy process, but it also faces shortages and skyrocketing costs of its raw materials.
- For the nonwovens segment, the production processes – which use both fibers and filaments extruded on site – are also highly dependent on gas and electricity. Polymer melting and extrusion, fiber carding, web forming, web bonding and drying are energy intensive techniques. Nonwovens can be found in many applications vital to citizens, such as healthcare (face masks) or automotive (batteries).
- It should also be noted that for some sectors the use of gas has no technological substitute: for example, paint and finishing production units make very heavy use of gas. These production units mainly consist of boilers and dryers, which operate only on gas and there is no alternative technology.
- The textile services sector is also struggling: due to the critical nature of the service they provide, they require a significant amount of energy to keep services, particularly hospitals and care homes, stocked with life-saving material as well as clothing and bedding for the patients themselves . The loss of these businesses would cause a shortage of clothing for healthcare professionals, including protective clothing for surgeons, nurses and doctors, uniforms including other forms of personal protective equipment.