Re-regionalization – a chance for Europe’s industry transformation
welcome everyone my name is pitis and welcome to innovation in infrastructure our brand new podcast series I’m very happy to announce that today we have a very very interesting topic which is a key topic for the European industry and I’m very happy to have tooren with us tooren is a senior partner and the managing director of our central European business and brings in probably 25 years of experience in all the relevant sectors that are relevant for the industry right thank you beer for having me you’re right 25 years amazing oh great to have you maybe let’s start to with an intro on framing uh the problem then ton why is this even a topic now why is it important to talk about the transformation of the European industry what are the key components that you see here for sure first of all the industry is at the turning point and what we see is also there’s a clear need for decarbonization or to decarbonize you need energy MH you need clean energy and uh if you look at the the European production right now we are by far number one in the world per capita and also installed capacity we have no natural resources material and also primary sources that means in Europe we have a DNA for efficiency and that’s the reason why we need in the future more clean energy more clean materials that’s very clear toson I think but what are indicators that you see for the state of the European industry you could say Europe is losing relevance as a manufacturing Hub and the typical indicator you can use is cross value added mhm and you could say in China has sleeped from 20% now to 27 and in Europe it goes our way around from 20 to 17 means overall we have lost industrial manufacturing capacity or you could say deindustrialization has started and do you also have a view on if this is a shift from from Europe to specific countries there’s there’s definitely what we can observe there is a shift from Europe to Americas and from Europe to Asia at the end of the day the picture is quite simple you have on one side you have Americas here you have industry and energy on the other side you have China or Asia you have energy and Industry and in Europe as said before we have no energy um but we have a lot of industry and that’s the reason why you see a shift in both ends West and East so what is it that the European industry could do to regain their competitive position I would say if the industry is able to produce products de carbonized products it’s by far the best positioning you can have in the world in the future and that’s the reason why you need clean energy clean energy in terms of electrons green electrons and also green molecules can be hydrogen can be methanol can be our derivatives this is exactly the positioning we need okay that’s very clear but the Dilemma always with clean energy is balancing competitiveness and availability so how do you see the angle of competitiveness and the second question to that would be how much clean energy would we need first of all I would say if you do comparison between Europe and Japan Europe is three times more expensive and if you do the comparison with us in some areas especially in 2022 we had 10 times higher energy prices than us and at the end of the day we could manage it and this is definitely a competitive disadvantage now we have to turn it around and the advantage comes from clean energy from Green energy from Green molecules and then we have a different positioning then we have a different product we have a clean green and decarbonized product but how would the European industry set the right Pathway to to build out this energy infrastructure that is needed for sure first first of all we need let let’s call it we need a new tectonic mhm I give you an example in the North Sea it’s for sure offshore wind installation m in the Mediterranean Sea it’s for sure photov volti for example because it’s a Sun Belt we need hydrogen hubs for landing infrastructure and on the coastline we have anyway infrastructure for Lending export capacities for example from midle East for example from us for example from South America let’s touch upon the landing hubs idea because I think one of the key interesting elements I would love the audience to know more about is the study you recently published on re regionalization so what is this concept about and why do you think this could be a good way forward for the industry the re- regionalization is a solution to do not de industrialize at the end of the day the idea is to say what’s my value chain where can I produce the following parts and components and what’s the best place to produce I give you a couple of examples or let’s say I give you one example AO industry you have a production of batteries no one is willing to produce batteries with non- green electricity and on the other end you producing bodies and the question goes in that direction where can you go for a marriage between a battery and a body typically you have it combustion cars it’s in one place um if you go in such a new value chain you have to find a place where you have both batteries and bodies and typically it’s Coastline because you need offshore wind capacities green electrons to produce so would that mean we would move from the century old model of industrial centers to a more distributed version I would say at the end it’s a mixed it’s a mix uh a mix between we have areas where we say we have a full production where can cover the value chain from let’s say cover the value chain with different production components and the our side we can we can spread out in different regions if we move into this new setup of how the energy industry would be pieced together what do you think are the implications for the Trad industry players for governments and so on that’s a good question um I would say there is a complete different view nowadays you have classical electric gits or you have classical gits you have classical pipes in the future you need more crits you need different pipes dedicated pipes for hydrogen for example that means a huge investments in crits and pipes in the future then you have to have a landing infrastructure that means you have PPA with other nations with other suppliers can be public private but can be also let’s say direct Investments and if you want to cover the full range of services you have to be a player in Europe you have to be a player in a single country but you have to be also International player or to organize it to orchestrate okay so that would mean quite a strategic shift for a few of the sure and especially in terms of Investments yeah in all this asset infrastructures what would it do to the employment model for the industry or for utilities for utilities because I think this is where the most decentralization will happen I would say at the end it’s a mixture between centralized and decentralized structures M phot the voltaic wind onore is definitely a decentralized structure if it comes to offshore wind Parks if it comes to lending infrastructure is a centralized infrastructure that means you have to play with both kinds of infrastructure in the future I would say not every utility will or can tackle it it will be a mixture between municipalities Regional ones will go for onore wind photo volti and PPA and then you have the big players International Players they will cover also Landing infrastructure and Global collaborations okay so collaboration becomes a key element in this absolutely absolutely I would say collaboration is anyway key in the future I would call it we need a clear Focus for different types of utilities MH and then if you have a clear Focus you have to have collaboration models and in addition we need speed otherwise our industry will run away how can we get this speed on the ground the most important question for sure beside the question of speed we need to right capabilities mhm and uh to have all the capabilities on board for international for national business for centralized and decentralized business this is really uh a tough exercise this shift sounds like we need a lot of enablement in a lot of maybe different infrastructure around it also from a policy point of view so I know in your study you you touched upon the key enablers that are relevant for for this new world to happen can you give us a brief about what are what are these enablers and how do you see them first of all on the infrastructure side we see or we need higher speed to ramping up Renewables this is on one side regulation on the other side permitting and all also investment that means we have to decomplex all this permitting structures in the future otherwise we cannot speed up otherwise we cannot ramp up in such a in such a scale the next thing is on the technology side adaptation of Technologies to reach Net Zero impact I’m always saying if we have existing Technologies please use it and the next generation will be more efficient but don’t wait until you get the next the next generation we need also the scale in Technologies the third thing is is a mobilization of skilled labor coming back to my first point we need the capabilities for the different areas as said before and then we need focused funds to invest and to ramp up and to accelerate this uh Assets in the future and by far I would say the crucial point is what’s the holistic view in term of impact I would say right now we are missing a view like how can you decarbonize the industry and which Technologies are needed can be a combination of efficiency can be a combination of hydrogen can be combination of wind and photovolt right now I have the feeling everyone is looking quite focused and there’s no holistic view to look at um to look at the decarbonization aspects of the industry MH and uh last but not least the classical things like easier permitting and more European view if I want to touch upon the technology topic again you said let’s not wait for new technologies to come let’s use what we have we have existing ones what are the Technologies you referring to that you think are crucial I would say first of all the classical things like offshore we are quite we are quite good equipped and we have everything we need onore technology is more or less the same I would say photovolatic right now is more a commodity we can easily use and in Europe we have a lot of knowledge around Energy Efficiency I would say we should invest in storage capacities in CCS we are not quite good we should invest in battery capacities and in addition uh electrolyzers for hydrogen production this is definitely a field where we should invest okay interesting this this then would already lead to my next question which was about what are the new value chain steps that you would see being built up in Europe that we don’t have today is it the manufacturing is it the production of of these Technologies is it R&D in research where would you see Europe’s strongest fit in there I would say we are quite good if it comes to mechanical engineering Parts typically we have it in onshore and offshore wind if it comes to electronics if it comes to battery and electroly we are missing raw material and here I would say the major Innovation is to set up cooperation with countries they can deliver raw material and perhaps it’s a production in our country or it’s a production of equipment and component in our country and assembly for example in Europe okay interesting which again touches up on your point collaboration is going to be ke for the European industry going forward but first of all you have to have a clear focus and then we are discussing collaboration and last but not least speed I can repeat myself yeah okay with this massive transformation ahe what are the top two things that you would say need to be focused on to get this moving for sure I would say we have two areas one area is cables and pipelines mhm cable can be different levels of electricity pipelines gas LNG for sure and also hydrogen pipelines here is more or less the question how can we accelerate permitting processes and how can we decomplex such things on the other end we have all the Technologies and here I would say we have everything but how can we speed up our capacities and if you look at the performance of the companies right now I would say there’s room for improvement to speed up or to accelerate or to to double the size of these companies and this is the crucial Point industry policy and how can we push for let me touch upon the the permit part because after the permit the real fund begins when you actually need to go into the construction and so far historically if you look back at infrastructure projects there’s always usually a delay sometimes bigger sometimes smaller but what you laid out sounds to me like we can’t tolerate having delays in deploying of infrastructure so what what are your thoughts on that how can we tackle this problem the question is how can we industrialize projects this is a key question at the end of the day industrialized processes typically you you need projects like a conveyor belt mhm more like a manufacturing process and therefore you need a platform who is able to track I give you an example if you send a parcel let’s say in that way if you send a puzle WIA DHL typically you can track and trise where is my puzle right now if you have different projects you need exactly this functionality you see exactly in which status my project is you can easily Choose Or you can easily switch and move capacities from A to B and this is exactly what we need that sounds like the entire digitalization part is a key component of this how do you see that sure for sure it’s a the platform is a digitalized uh solution at the end of the day you have all the processes as said industrialized like you know exactly in industrial process where is my material where is my car where is my machinery and all these things and this is exactly you need in such a in such a process industrialization of projects Europe has been known over the past centuries for exporting a lot of knowledge and a lot of products if you maybe take a future perspective like 20 years from now and this derealization has happened what do you think are the key elements that Europe exports at the end of the day energy is a commodity and what we can create is we have a value chain and in the value chain you have a decarbonized end product can be steal can be cement can be chemical products this is exactly what we need and this is a differentiator on a global level from your experience working with many of the European industry players uh do you see active pursue of this action by the major industry players either in them moving into converging industries that are relevant for this new setup or proactively trying out concepts of dere regionalization or is this something not touched yet at all no no I see I see exactly what you are saying the question is do we have a partner is there utility who can offer all electrons and molecules is a utility able to export from different places in the world and offer nice pricing in the system and sometimes we see this industry three players are moving backwards that means fully integrating into the value chain of the Energy company and sometimes it’s a it’s a PPA sometimes they are going into Power purchase agreements sometimes they are using independent power producers sometimes they are see different players in the portfolio it’s really a colorful mix right now and if we take one step back on a global view how do do you see this transformation that obviously the European industry now needs to do do you also see this in other regions of the world I said before America China and Asia different markets but what we see is the American utilities are looking more for export strategies Australia for example it’s the same and China it’s more like Tech and components they say we want to be the leader in electrolyzers you saying we want to build up a hydrogen Hub and let’s export the capacity we have to Europe for example great then to wrap it up for the audience in terms of what are the top things that if I’m a industrial player in Europe right now what is it that I need to do and at the same side if I’m a policy maker in the European Union what are the top three things that I should focus on very good question first of all as an industry player I would ask the question what’s the role of decarbonization for my products and services mhm the second question will be how can I get decarbonization inputs like electrons molecules who is the right provider and if I cannot get it is regionalization or de-industrialization the right answer and perhaps for sure it’s also a question do I have the right capabilities on the politician side on the regulator side I would ask the following question how can I create future business how can I create value for my region is there a need for investment should I invest in infrastructure can be base infrastructure can be cable pipeline can be zones and all these things and at the end of the day how can I create tax and hopefully employment for my region excellent I think that’s a great summary to some of the topic for everyone that’s interested in in more details the study is online at our website and thank you so much torson for taking the time today thank you P thanks
In this episode, Dr. Torsten Henzelmann and Pierre Samaties explore Europe’s #industrialtransformation. They unravel innovative strategies to seamlessly integrate #renewableenergy into the continent’s fabric while strengthening supply chains for decarbonization technologies. Their dynamic exchange sheds light on the synergy between centralized and decentralized dynamics, heralding not just a path to net-zero emissions but a renaissance of Europe’s industrial backbone with emerging hubs. They underscore the pivotal actions that industrial leaders and policymakers must undertake to secure Europe’s leadership in the energy and manufacturing transition, while highlighting the importance of exploring Europe’s existing technologies to help shape this transition.
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