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Industry Talk

Euratex calls for an EU-wide cap on gas prices

Thousands of companies at risk of closure, organisation says.

30th August 2022

Innovation in Textiles
 |  Brussels, Belgium

Clothing/​Footwear, Sustainable

Euratex, the Brussels-based organisation representing around 154,000 companies employing 1.47 million workers in the EU textiles and clothing industry, is calling for a single European strategy to tackle the current energy crisis.

To safeguard the future of the industry, a revision of the electricity price mechanism is necessary and an EU wide cap on gas prices at 80€ per MWh needs to be set, the organisation says.

Special company support also needs to be granted to avoid bankruptcy and the relocation of textile production outside Europe.

Gas and electricity prices have reached unprecedented levels in Europe and due to severe global competition in the market that characterises the European textiles and clothing industry, these cost increases are impossible to pass on to customers. This has already led to capacity reductions and production stops. Closures and the shift of production outside Europe are being forecasted should the current situation persist, leading to further de-industrialisation of the continent and an increased dependency on external suppliers.

Specific segments of the textile industry are particularly vulnerable. The fibres industry, for instance, is an energy intensive sector and a major consumer of natural gas in manufacturing. The disappearance of European fibre products would have immediate consequences for the textile industry and for society as a whole. The activities of textile dyeing and finishing are also relatively intensive in energy. These activities are essential in the textile value chain in order to give the textile products and garments added value through colour and special functionalities.

Governments should ensure that critical industries such as textiles and all its segments are able to ensure gas and electricity contracts towards the end of the year at an affordable price, Euratex says. Stable and predictable energy supply is of the utmost importance. Gas restrictions and rationing must only be used as a last resort. No mandatory consumption cuts should be foreseen.

In addition to these measures under discussion, Euratex says it is seeing a proliferation of contradictory, uncoordinated national initiatives to tackle the energy crisis. This has led to a de facto fragmentation of the Single Market, resulting in a chaotic policy and regulatory environment that adds a further strain on the supply chain, which is fully integrated at European level. Measures that guarantee a level playing field in the EU are of the utmost importance.

“Given the current situation, a scenario where entire segments of the textiles industry will disappear is possible,” says Euratex president Alberto Paccanelli. “This would lead to the loss of thousands of companies and tens of thousands of European jobs and would further aggravate the dependency of Europe on foreign sources for essential goods. This applies specifically to SMEs who need temporary support measures – state aid, tax relief and an energy price cap – to survive the current crisis and to prepare for the green transition in the longer run.”

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