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September 21, 2022

Europe energy crisis will cost textile jobs and capacity

The European Textiles Association (EURATEX) is urging more incisive action in tackling the energy crisis in the region and says policies must be implemented without delay.

By Hannah Abdulla

EURATEX says while it welcomes recent proposals from the European Commission, it acknowledges they “lack ambition” and will come at the cost of losing industrial capacity and jobs across Europe.

Earlier, the Commission proposed to change the Title Transfer Fund (TTF) benchmark parameters and decouple the TTF from the electricity market and revise the merit-order principle for the electricity market, and amend the state-aid framework. EURATEX said under the current proposals Europe will remain without its integrated textiles ecosystem, as we know it today, and no means to translate into reality the EU textiles strategy, for more sustainable and circular textiles products.

“An ambitious and meaningful European price cap on the wholesale price of natural gas is absolutely necessary. Europe is running out of time to save its own industry. It is now time to act swiftly, and decisively in unity and solidarity at European level. We understand a very high price cap has been so far discussed among Ministries and that is not reassuring for companies across Europe: if any cap is, as expected, above 100/MWh, these businesses will collapse,” the body said.

“Already in March 2022, with EU gas wholesale prices at EUR200/MWh, the business case for keeping textiles production was no longer there. To date, natural gas wholesale prices have reached the level of EUR340/MWh, more than 15 times higher compared to 2021. Currently, many businesses have suspended their production processes to avoid the loss of tens of thousands of euros every day. We hope 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 swiftly adopt decisive, impactful and concrete actions to tackle the energy crisis in Europe and ensure the survival of the European industry.”

Euratex also said specific segments of the textile industry in Europe are particularly vulnerable including the man-made fibres (MMF) industry which is energy intensive; nonwovens, which is highly dependent on gas and electricity; dyeing and finishing which have no technological substitutes.

“Given the dire international competition in which the EU textiles industry operates, it is not possible to just pass on the increased costs to consumers. Yet, with these sky-high prices, our companies cannot afford to absorb those costs. The EU textiles companies are mainly SMEs that do not have the financial structure to absorb such a shock. In contrast with such reality in Europe, the wholesale price of gas in the US and China is EUR10/MWh, whereas in Turkey the price is EUR25/MWh. If the EU does not act, our international competitors will easily replace us in the market, resulting in the de-industrialisation of Europe and a worsened reliance on foreign imports of essential products.”

Earlier today (21 September) the UK apparel sector reacted to a new energy announcement for businesses in the country.

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