7. Industry

indicator policy issue DPSIR assessment
industry eco-efficiency has the sector been successful in becoming more environmentally efficient? pressure

The service sector is taking over from Europe's manufacturing industry as the cornerstone of the economy. At the same time, manufacturing industry is becoming more specialised and focused on high value added products. These developments, together with many years of regulatory controls, have led to an increase in eco-efficiency for the main air pollutants.

7.1 Eco-efficiency in industry

The manufacturing industry sector covers a broad spectrum of manufacturing and processing activities whose products range from raw materials to consumer goods. In 1997, manufacturing and construction accounted for around 27 % of total value added in the EU — slightly lower than the 30 % in 1990. The industry sector's share of total employed persons in the EU is also around 27 %.

The many pollutant emissions from industry have traditionally been subject to regulatory control. Whereas the range of instruments for reducing pollution from other sectors has broadened to include taxes and other instruments for directly internalising environmental costs, EU controls on industrial pollution are largely based on media-specific (i.e. air, water and waste) environmental laws. Recent developments include integrated product policy, eco-efficiency improvements, environmental agreements and eco-management.

The Integrated Pollution Prevention and Control (IPPC) Directive, which must be fully implemented in existing plants by 2007, forms the new centrepiece of EU industrial pollution control. Although restricted to large installations, it breaks new ground by establishing an integrated regulatory framework in which air, water and waste emissions are viewed as a whole under a single environmental permit issued by one regulatory authority. The IPPC Directive also demands the use of Best Available Techniques (BAT), environmental management, cleaner production and waste reduction.

Existing policies have already succeeded in reducing emissions of the main pollutants (Figure 7.1). Based on energy consumption and selected air emission data, industrial eco-efficiency appears to have improved slightly between 1990 and 1996. The industrial production index dropped steadily until 1993, but reverted to the 1990 level by 1996. Trends for energy consumption and carbon dioxide ollow a similar pattern, although carbon dioxide levels fell in 1996. Sulphur dioxide emissions in the EU as a whole dropped steadily during this period.

Although these total emissions suggest a positive trend in industrial eco-efficiency, they mask diverging trends between individual Member States, e.g. nitrogen oxide emissions from industry in France and Italy grew during this period. In addition, the pollutants are particularly characteristic of heavy industries such as iron and steel, petroleum refining, pulp and paper, and organic chemicals. Emissions of pollutants such as heavy metals which are more representative of European industry — notably small and medium sized enterprises (SMEs) — are not known. Wastewater and hazardous waste data has not been harmonised and is therefore not considered.

Figure 7.1: Eco-efficiency in industry in EU Member States

Source: EEA; Eurostat
Note: 1990 = 100

 Industrial eco-efficiency has improved for the main air pollutants, but not for energy consumption.

In line with its share of economic production, industry accounted for around 30 % of total energy consumption and 20 % of carbon dioxide and sulphur dioxide emissions in 1996 (Figure 7.2). This makes the sector an important stakeholder with respect to climate change and acidification issues. Its contribution to problems associated with emissions of nitrogen oxide and non-methane volatile organic compounds (NMVOCs) such as summer smog is moderate.

Figure 7.2: Industry environmental profile in EU Member States, 1996

Source: EEA

Industry in the EU uses an estimated 25.4 billion m3 of water per year — some 10 % of abstracted water (see Figure 12.3). The amount used varies greatly between countries, but inconsistent inclusion of cooling water for power generation in national statistics limits comparisons. In many European countries (e.g. France, the Netherlands and the UK), industrial water demand fell throughout the 1980s and 1990s. This is mainly due to economic recession forcing plant closures in industries that use large amounts of water (e.g. textiles and steel mills) and a move towards less water-intensive service industries. Water conservation and increased recycling have also contributed to the decline. Internalisation of environmental costs for water resources is expected to be a major factor in increased conservation. Charges on water supply and wastewater treatment have been increasing steadily across the EU partly to fund infrastructure improvements and partly due to privatisation.

EU waste statistics are currently limited. However, it is estimated that manufacturing accounts for more than a quarter of the waste generated in the EU (EEA, 1999).

White paper = bad paper?
The paper industry traditionally relies on the bleaching properties of chlorine to produce white paper products. A typical paper mill discharges around 35 tonnes/day of organochlorides, while a mill using chlorine dioxide discharges about 7-10 tonnes/day. Many organochlorides are persistent organic pollutants (POPs), characterised by their persistence in the environment and accumulation in living organisms. However, organochloride emissions can be avoided by adopting chlorine-free bleaching methods such as oxygen delignification. Chlorine-free methods have the added advantage of allowing mills to move towards a closed-loop system, thus reducing water and chemical use. These savings are estimated to offset the capital cost of converting a mill to chlorine-free technology in just a few years. Today at least 55 paper mills in the world use chlorine-free technology. Most of these mills are in Scandinavia, but the technology is spreading throughout Europe with several Portuguese and Spanish mills currently converting to totally chlorine-free methods.

7.2. Trends in industry

Significant changes in the sector have taken place due to globalisation, innovation and consumer demand. Between 1985 and 1995, employment increased in only three manufacturing sectors (chemicals, plastics, and computers and office equipment) — and then only marginally (Table 7.1). In contrast, service-sector employment grew by nearly 15 % during the same period, reflecting both the overall economic shift towards services and the impact of technology on employment. This change has been driven by market liberalisation (both globally and through the Single Market) and technological innovation. However, manufacturing still provides the basis for most service activities and will therefore remain key to the EU economy. Although employment can not be correlated directly with industrial pollution, these statistics reflect important trends in the sector.

Table 7.1: Levels and changes in salaried employment in the EU, 1985-1995
Sector Employment 1995 (1 000) Change in employment1985-1995 (%)
Iron and steel 769 -31.3
Non-ferrous metals 216 -22.9
Non-metallic mineral products 1 388 -6.3
Pharmaceuticals 1 344 -9.9
Basic and speciality chemicals 362 2.5
Metal products 2 539 -2.5
Mechanical engineering 2 781 -11.2
Office equipment, computers and precision instruments 732 0.3
Electrical engineering 2 729 -11.7
Motor vehicles 1 967 -8.9
Aerospace equipment 356 -20.6
Food, drink and tobacco 3 069 -8.6
Textiles and clothing 2 831 -25.7
Paper, printing and publishing 2 059 -0.6
Miscellaneous manufacturing industries 2 234 -17.4
Rubber and plastics 1 205 3.0
Total manufacturing 26 581 -11.4
Source: DG Industry; Eurostat    

Despite declining employment in the manufacturing sectors, national income as measured by gross domestic product (GDP) has been growing steadily since 1970. In general, the disposable income of families across the EU has also increased. Consumption has shifted towards sophisticated finished goods, while basic heavy industry (e.g. iron and steel) is increasingly giving way to manufacturing processes with more value-added products.

Countries outside the EU with cheaper labour and resource costs may be assuming a greater share of heavy industrial production, as the EU's industrial sector becomes more specialised and less resource-intensive, and its service sector grows.

The beginning of a move from products to services is also noticeable within the manufacturing sector itself as producers assume responsibility for material re-use and recovery (e.g. for cars and office equipment) partly due to producer-responsibility legislation. Purchase of goods sometimes includes services for maintenance, recycling component parts, re-using/recycling packaging, etc. One aim of sustainable development policies is to shift the focus from selling products (e.g. pesticides and solvents) to providing a service function (e.g. plant protection and degreasing services), thus disconnecting economic growth from increased consumption of natural resources.

The need for environmentally responsible measures is particularly urgent in the chemicals sector, where Europe is a world leader accounting for 38 % of global turnover. Until 1993, chemical production in the EU increased roughly in line with GDP, after which it began to grow faster. This rapid pace of development has been accompanied by uncertainty: the exact number of chemicals currently on the market is unknown (estimates vary from 20 000 to 70 000) and toxicity data is lacking for most of them (thereby limiting risk assessment). The expected continuation of economic growth, coupled with increases in agricultural production, could result in a 30-50 % growth in chemical production for most EU countries by 2010. The increasing volume and variety of substances released and accumulating in the environment increases the risk of damage to human health or ecosystems.

Sustainability enterprise

The Swiss company, Sustainable Asset Management, has teamed up with Dow Jones to create a global sustainability index – the Dow Jones Sustainability Group Index (DGSGI). This index is intended to serve both as a guide to investors and a tool for benchmarking companies across different industry sectors. It is based on criteria that include: efficient, effective and economic use of human and natural resources; company management; production; growth; competitiveness, and responsiveness to social change.

The DJSGI is fully integrated with and derived from the Dow Jones Global Index. It currently contains 200 companies that represent the sustainability top 10 % for 73 separate industry groups in 33 countries. Although the DJSGI was launched only in September 1999, pilot results showed that companies which score highly on the basis of sustainability criteria also tend to show better-than-average returns on investment.

Source: DJSGI

7.3. Indicator development

Due to the lack of harmonisation in the collection and processing of environmental data at an EU level, the indicator in this chapter is limited to energy use and emissions of air pollutants. Greater accuracy and consistency of emissions estimates is a priority. Other types of environmental pressures need to be further developed such as waste generation and disposal, water pollution and resource-use efficiency.

For the future, a differentiation by industry branch level is needed, for example, with respect to eco-efficiency developments. Particular attention also needs to be given to small and medium-sized enterprises (SMEs). Response indicators covering prices, taxes, subsidies and voluntary agreements together with analysis of their effectiveness, would also be desirable.

Table 7.2: Production index in EU Member States — annual changes
Unit: percent
Country 1985 1990 1991 1992 1993 1994 1995 1996 1997 1998
Austria * * * * * * * * * *
Denmark 1 8 -4 4 -8 3 6 1 4 3
Finland * -1 -9 -3 1 9 6 4 9 7
France * 2 -1 -1 -4 3 2 -1 3 4
Germany 4 5 2 -1 -7 4 1 0 3 4
Greece * * * * * * * * * *
Ireland 3 5 3 9 6 12 19 8 15 16
Italy 7 0 0 -1 -3 3 5 -1 3 0
Luxembourg 3 1 1 0 -3 3 0 -3 5 3
Netherlands * 1 1 -1 -2 3 2 2 2 1
Portugal * * * * * * * * * *
Spain * 1 0 -5 -5 6 5 -1 5 7
Sweden * * * * * * * * * *
UK * 0 -4 0 1 5 2 1 * *
EU * 2 -1 -1 -4 4 3 0 3 3

7.4. References and further reading

European Commission, DG Industry (1997). Panorama of EU Industry, 1997. Brussels/ Luxembourg.

EEA (1999). Environment in the European Union at the turn of the century. European Environment Agency, Copenhagen.


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