Green Notes – Europe

Recently, Joan and I were traveling in Europe, especially in Belgium and France. As we traveled, I gathered impressions on economic and industrial circumstances that may affect smaller American manufacturers. Competition is global now, so what happens elsewhere can affect everyone, perhaps immediately and directly, or perhaps indirectly, or perhaps in the future. This post reports some of those impressions. — C.H.

The European Union

Map - Europe from SpaceIt is important to remember that the European Union (EU) is a voluntary association of independent and sovereign nations. Taken together, the EU members comprise an economy that is roughly the same size as that of the U.S. Member nations subordinate certain policy arenas to the EU in the common interest. The EU can establish directives that establish mandatory EU – wide goals, then require individual members establish specific compliance plans.[1] Some of these directives significantly affect the conduct of business within the EU.

Speaking generally, European national governments and the EU central authorities are more active on environmental regulatory matters than are most U.S. authorities, California excepted. Accordingly, manufacturers should be aware of regulatory activities in Europe — especially the EU — because those regulations are binding on all who seek to sell in the EU. Further, the State of California has, in the past, adopted certain EU directives almost verbatim as California state law.

EU Environmental Directives

Here are some EU directives that may affect your business if you want to ship to the EU, or if your customers want to ship to the EU. Even if these directives don’t affect your business today, it might be prudent to expect them to expand in scope, and to migrate to the U.S. in one form or another:

Regulation of Hazardous Substances
(RoHS) — RoHS holds manufacturers responsible to demonstrate that certain products and the components of those products do not contain certain substances in excess of established limits. Initially, electrical products are covered and the regulated substances consist of heavy metals and some fire retardants. California has a similar law. Expect both the EU regulation and its California counterpart to include more products and more substances as time goes on.

End of Product Life Responsibility
— The EU requires that manufacturers are responsible for collection and recycling or safe disposal of certain products, including vehicles and electrical equipment. This can be done by the manufacturer individually or through joint actions. Again, one can expect the scope of this regulation to expand over time, eventually to include just about all tangible products. California has similar law.

Green Energy Policy
— The EU has established a directive that 20% of all energy used within the EU be generated by renewable sources by 2020. “Renewable sources”, generally speaking, means sources that do not involve combustion. It is interesting to compare some of the member nations’ compliance plans:

  • Britain has agreed to increase reliance on renewable sources from roughly 3% in 2009 to 15% in 2020.

  • Germany has decided to discontinue the use of nuclear energy in light of the recent accident in Fukushima, Japan. Nukes generated 23% of Germany’s electric power before the Fukushima earthquake and tsunami. That will be reduced to zero by 2022, presumably replaced by renewables.

  • Denmark, a significant producer of petroleum, has trumped everybody by proposing to increase use of renewables to 30% by 2020, and to 100% by 2050!

The point here is that the use of renewable energy is being required by law in the EU and in other nations. Expect increased international pressures on the U.S. to do likewise.

One for the Road

My travels in Europe this trip were by automobile. Gasoline was around Euro 1.65 per liter, translating to about $8.25 per gallon. And there are many toll roads. And traffic on the loop around Paris is terrible. Believe it or not, the price of gasoline in the U.S. can go up, as Europe demonstrates. When it does, the cost of transport will go up with it. Shortening the transportation segments between each section of your value chain is a good place to find competitive advantage.

Chuck and Joan - Paris
Thoughtful comments and experience reports are always appreciated. Click on the title of this post to open the comments section.

…  Chuck Harrington

: Sincere thanks to Sylvia Mohr at the commercial section, U.S. Embassy – Brussels for her insights on how conditions in Europe may affect smaller American manufacturers. Of course, all of the opinions and conclusions expressed in this post are my responsibility.

A .pdf version of this post is available at:

Images: Map – Dreamstime, Photo – Mike McLaughlin

[1] For more on the EU and its environmental directives see: