Higher energy costs and an increased focus on decarbonisation are affecting the competitiveness of European paper packaging producers, a new report from Rabobank has found.
The report, The Competitiveness of European Paper Packaging, suggests that, while Europe was once well known for its cost-effective paper packaging production, it has ‘experienced a shift in its competitive position’.
Energy Consumption
Energy-related issues have meant that Europe is now one of the highest-cost regions in which to produce paper, affecting both exports and the profitability of European paper mills.
“In the near future, energy will remain a crucial factor differentiating European producers, both on a global scale and within the Continent,” said Natasha Valeeva, senior analyst, packaging and logistics at Rabobank.
“Europe was a level playing field when it came to energy, but it is under severe strain now. Reforms to the EU Emissions Trading System – EU ETS – will also bring new challenges to the industry.”
New Opportunities
According to Valeeva, the current situation will require paper packaging producers to “accelerate” the adoption of technologies aimed at reducing energy consumption, as well as improving heat supply efficiency, decarbonising steam supply, and adopting renewable energy sources.
“Recognising that energy challenges can also present strategic opportunities, European paper packaging producers must shift their focus toward decarbonisation to maintain their competitive edge in the evolving energy landscape,” said Valeeva.
“While most paper packaging companies are likely to continue their operations in Europe, despite the current challenges, some may review their operations and look to relocate production elsewhere,” she added.
