Climate change and environmental degradation are undeniable threats to our world. To overcome these challenges, the EU launched a new growth strategy that will transform the Union into a sustainable economy. The EU plans to be climate neutral in 2050.
Things are changing in other continents as well. Joe Biden put renewable energy at the heart of his plans to reboot the US economy and help to fight against climate change. China formalised the outline for the 14th five-year plan and long-term targets for 2035. China put 18% reduction target for “CO2 intensity” and a 13.5% reduction target for “energy intensity” from 2021 to 2025.
While EU focuses to make Europe climate neutral by 2050 and plans to spend €150 billion for transition and boost the economy; how will these developments affect Turkey, one of the leading countries in terms of the volume of trade with Europe?
Supply Chain & Logistics
In this decade, we are witnessing a revolution of fossil-free vehicles. Producers are leaving to produce fossil-fuel cars and switching their facilities to greener vehicles. Turkey, as a geopolitically bridge between Asia and OEM centre of Europe, must start its green-logistic transformation today. During this transformation, the logistics sector has to find its greener way, because logistic flows must become much more sustainable, or else they will be penalized.
Another key point is the green supply chain. Switching to a green supply chain concept helps to digitalize internal operations and reduce environmental degradations, contain air, water and waste pollution through the adoption of green practices in business operations. Beside the Green Deal requirements, the green supply chain can reduce production costs and it also can spur economic growth, create competitive advantage in terms of greater customer satisfaction, positive image and reputation and provide a better opportunity to export their products in pro-environmental countries, starting from EU zone.
Facing the consequences of the Green Deal is not so far for Turkey. Manufacturers must be ready for a radical change that affects the whole chain from the raw materials to logistics of the final products and start with a master plan from now on.
Advanced Manufacturing and Digitalization
Advanced manufacturing and digitalization are strategically important for the European industry, having an impact on Europe’s global technical lead, as well as on the economic growth.
The use of knowledge and innovative technology to manufacture complex products, creating know-how, and digitalize processes to lower waste, pollution, material consumption and energy use will be key factors for the ‘Factories of the Future (FOF)’ in the EU.
Advanced manufacturing means green manufacturing as well. Turkish manufacturers have to transform & digitalize their production processes that pollute less, use fewer resources, e.g. finding ways to use less water in production. Companies have to boost innovation for safe and sustainable chemicals and increase protection for human health and the environment against hazardous chemicals.
Having strong penetration of renewables in the energy mix and achieving a more environmentally and sustainable energy system are the cornerstones of the EU’s Green Deal. Analysts expect renewables to take place over 55% EU’s energy mix by 2030.
Renewables like wind and solar with storage or fuel cells can be established on the facility, to supply continuous energy to critical manufacturing operations and supply chain functions. In addition, it can protect Turkish manufacturers from extra taxes and responsibilities of the Green Deal and carbon border levy.
Carbon Border Levy
Carbon border levy is in fact quite important for Turkey, as an export-oriented country. Many international brands are aware of the geopolitical importance and advantages of the labour force of Turkey. Many of them have facilities or OEM partners in the country. If Turkish manufacturers will not consider carbon-friendly actions in the short run, they can lose their advantages and competitiveness for international markets.
Summary and Lessons Learnt
Let’s finalize with the great summary of BCG’s ‘How an EU Carbon Border Tax Could Jolt World Trade’ article:
“Whatever policy is adopted; the size and strategic importance of the EU market means its action could transform the fundamentals of global advantage. Companies around the world will be compelled to manage their carbon footprints with greater urgency. The best performers in each sector will not only enjoy a competitive edge in Europe but also have a head start against less adaptable rivals in other markets as more nations embrace financial incentives to push companies to accelerate the fight against climate change.”