Europe's Chemical Sector Warns of Disappearance Under EU Green Deal Pressure
CEOs from Europe's chemical sector are warning of its imminent disappearance due to the EU Green Deal, high energy prices, and excessive regulations, creating an uneven playing field. Production capacity has significantly declined, threatening millions of jobs. Industry leaders demand swift changes to EU law, highlighting severe cost disadvantages compared to competitors in Asia and the US. They stress the urgent need for a regulatory framework that acknowledges global competition and current geopolitical realities, as Europe shifts from an exporter to an importer.
Europe's chemical sector, a significant contributor to the EU's industry and employment, is facing a severe crisis, with leaders predicting its potential disappearance. Industry CEOs, including those from BASF, Qemetica, and Grupa Azoty, report that nearly 10 percent of production capacity has vanished in recent years, with a projected 14 percent shrinkage in 2023-2024. This decline is attributed to the EU Green Deal, soaring energy and CO2 costs, and a complex web of regulations that make European production uncompetitive globally.Companies are struggling against competitors in Asia, the Middle East, and the United States, who benefit from significantly cheaper energy (e.g., US gas 4-6 times cheaper) and minimal CO2 emission fees. Regulatory compliance costs in Europe are reportedly double the spending on research and development, leading to an 8 percent decline in European R&D while competitors invest more. CEOs emphasize they support decarbonization but challenge the pace, scale, and structure of regulatory burdens. The ETS system, for instance, forces companies to purchase expensive certificates amidst a crisis, blocking new investments. Europe's chemical industry, once an exporter, is now increasingly an importer, with countries like China aggressively filling the market with cheaper products due to their own surplus capacities and less stringent regulations. Leaders warn that plants are closing permanently, and the buffer of past profits is depleting. While technological advancements offer some hope for cost reduction, urgent, far-reaching changes to EU law are deemed essential to level the playing field and prevent the sector's collapse, safeguarding millions of direct and indirect jobs.
