Paolo Alburno (CLEPA): ""The next European Commission must provide the right conditions for a competitive EU industry.

AutoRevista.- How can you describe the adaptation of the supply chain located in Europe regarding new challenges about materials, regulations and sustainability? How is the position of European automotives suppliers in comparation with Asian (Japanese, Chinese) and North America competitors?

Paolo Alburno.- European suppliers are at the forefront of environmental protection and sustainability achievements. There are high safety standards and requirements that need to be followed by
vehicles on the market and the specific properties of certain chemicals and substances are key for ensuring needed resistance, durability, protection, etc.
 

On challenges, due to its complexity, the substitution of substances within the automotive value chain takes between three to five years on average, and that is if a feasible alternative already exists. There are specific challenges associated with the identification of alternative substances in the automotive industry, often leading to necessary trade-offs. For example, a substance or material that confers more durability and resistance to a product for the lifetime of a vehicle is not necessarily one that is easier to recycle, repair, or
that fulfills the strict performance and safety requirements of vehicles, while still being aesthetically pleasant or economically viable. Though the use of LCA calculations might cover some of these aspects, it is still unclear who defines the acceptable levels in the process.

 On solutions, close collaboration with European vehicle manufacturers means that good practice and supporting tools have been put in place at an early stage. One example is the International Material Data System (IMDS), developed by automotive OEMs which enables global reporting of materials used in automotive supply chains. This tool is continuously updated to cope with new standards, laws and regulations in the field of substances and recycling targets. For instance, once the PFAS restriction proposal was published last year, suppliers were asked to report all identifiable PFAS (based on CAS number) used in their products through IMDS.

Another important automotive initiative is Drive Sustainability (DS), an Automotive Partnership between several automotive manufacturers that promotes a common approach for sustainable supply chain practices (e.g. business ethics, working conditions, human rights and environmental matters) and supports the integration of sustainability into procurement processes. Other examples are Responsible Supply Chain Initiative (RSCI) and the establishment at the United Nations of a dedicated Life Cycle Assessment (LCA) – working group developing a globally harmonised LCA methodology.
 

In 2022, the CLEPA Forum for Automotive Aftermarket Sustainability initiative (FAAS) was established, with the purpose of advancing sustainability along the automotive aftermarket lifecycle. CLEPA and European suppliers also liaise with Japanese and North American suppliers under the umbrella of JAPIA, the Japanese Automotive Suppliers Association, and MEMA (Motor & Equipment Manufacturers Association of the USA), which are driven by similar interests and ambitions.

AR.- How is the rising of the electrification changing the requirements in terms of materials, regulations and sustainability?

P.A- While electric mobility is central for decarbonising tailpipe emissions, its success depends on several framework conditions, such as customer demand, sufficient charging infrastructure, grid capacity expansion and renewable energy availability. On the materials front, one of the pain points is the scale up of battery production capacity, and improvements on the efficiency, range and recyclability. Many of the critical raw materials needed for production of batteries and e-motors are mainly imported for third countries, creating strong dependencies and economic pressure on the supply chains for these technologies. Furthermore, there is a growing skills gap in the sector, raising an urgent need for up-skilling and re-skilling of the workforce in Europe, which is required to electrify the sector.
 

Given the uncertainties in these areas, flexibility and adaptability are crucial. Applying the LCA principle at EU-level allows the use of all available technologies for emission reduction, including advanced plug-in hybrids, range extenders and hydrogen solutions. Climate neutral mobility is not a question of propulsion technology but of renewable electricity and fuels. This strategy will drive a swift and efficient transition to climate-neutral mobility without undermining existing investments in electrification.

Other initiatives under the EU's Green Deal include the new Battery Regulation with extended producer responsibilities, recycling targets for various critical materials and updated product environmental footprint. Several ongoing REACH and CLP actions on classification, restriction and other REACH processes may impact the availability of essential materials for EVs. The most critical example is the upcoming PFAS restriction proposal, which would prevent the production and use of several essential chemicals for EV parts and components.

AR.- Can we talk about an important dependency of the European supplier industry relative to some key materials for electric vehicles from Asia?

P.A.- The high demand for critical raw materials can be a bottle neck for manufacturing and deploying electric vehicles and their components in Europe. Suppliers heavily rely on secure access to (processed) raw materials to manufacture the wide range of innovative components crucial for advancing climate-neutral mobility, including batteries, electric motors, and lightweight parts.
 

The Critical Raw Materials Act sets the right ambitions, but there is a risk that the emphasis is too much on stress testing, regulatory action plans, unsupported targets and too little emphasis on ensuring investment into a diversified supply chain and circular design. Most importantly, the EU will not itself be able to meet its demand for raw materials. We welcome the Commission’s efforts to create raw materials partnerships with third countries, which need to be complemented by the right level of investments.

The ratification of negotiated trade agreements, like the free trade agreement with Mercosur, would be an important sign that the EU is a credible business partner, building up of a global, diversified raw material supply chain. 

AR.- It usually said about an overloaded regulation from the UE to the automotive industry with negative effects in competitiveness? What are CLEPA's demands to combine sustainability with competitiveness?

P.A.- In short, improvement of fundamental investment conditions and more technology openness. To improve the investment conditions we need to improve access to capital and an EU funding instrument to help derisk investments in the industrialisation of innovative green technologies as well as support to transform legacy facilities to manufacture green mobility components. We need a long-term strategy to bring down energy costs, ensure sufficient supply of renewable and nuclear energy as well as to re- and upskill the European workforce.
 

A technology-open approach for reducing emissions throughout the entire life cycle of the vehicle in order to drive innovation and efficiency is needed for boosting competitiveness while transitioning to carbon neutral mobility.
 

AR.- What are your expectations about the use of natural resources (rice husk, soy foam, wheat straw, kenaf fibre, coconut fibre, agave plant, among others) as materials for manufacturing car components?

P.A.- There are various projects experimenting with the use of natural fibers in automotive products and some are entering the market, however, the extremely challenging physical, thermal and chemical conditions related to automotive components that need to grant high performances for a lifetime of 20 or more years, requires strict validation and careful consideration.
 

AR.- What actionable conclusions would you like to draw from the CLEPA Materials Regulations and Sustainability Event 2024?

P.A.- Dialogue along the whole value chain and with regulators is key to success. Sustainability is a shared responsibility and a global matter, all regions must put in place ambitious yet feasible policies with requirements and timelines that are aligned at international level. Regulation can help facilitate sustainability achievements but it needs to be effective and efficient. Regulation should avoid overlaps and duplication of requirements that are similar in nature, reduce to a minimum the administrative and reporting obligations while seeking global harmonisation and regulatory convergence.

As the industry adapts and prepares to implement the sustainability targets from the European Green Deal, the next European Commission must provide the needed support and enabling conditions for a competitive industry in the EU.

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