BY NEIL EISBERG
Twenty years ago, when I first joined C&I as Editor, the main topic of conversation across the European chemical industry centred on the EU’s proposed Regulation, Evaluation and Authorisation of Chemicals, the so-called REACH regulations.
There were numerous reasons for REACH, but essentially it was seen as an embodiment of society’s desire to produce fewer industrial chemicals; to understand the possible human and ecological hazards of those that are produced and to ensure that any major threat was anticipated, as well as prevented.
Most chemical industry groups still consider it the most wide-ranging – and costly – regulatory initiative related to health risk assessment ever to be introduced. At the time it was believed that, at best, REACH would burden the industry with additional costs and, at worst, spell the end of the European industry’s competitiveness and profitability.
Twenty years later, while industry has not exactly grown to love REACH, there is an acceptance of it, and the REACH concept has been replicated across the globe in some form or another.
But now there are host of new issues to threaten the survival of the European chemicals industry, and the industry in the UK in particular.
At the end of January 2025, the European Chemical Industry Council (Cefic) published a report, The Competitiveness of the European Chemical Industry, suggesting that the European industry is at breaking point.
Also in January, Jim Ratcliffe, Chairman and CEO of Ineos, warned that the European chemical industry is in danger of becoming extinct. He has also said that the ‘lack of energy strategy and high carbon taxes continue to de-industrialise Britain’.
His comments were made as Ineos announced plans to close the last remaining UK synthetic ethanol plant. The press announcement was entitled: ‘Chemicals coming to an end in the UK’.
In a statement, Ineos said: ‘The UK, which used to be a major force in chemicals, employing a large and highly skilled workforce, has seen the closure of 10 large chemical complexes in the last five years alone and, in complete contrast to the USA, has not had one new chemical plant built for a generation.
‘Energy prices have doubled in the UK in the last five years and now stand five times higher than those in the USA. The UK cannot compete with such a huge disadvantage’.
To back up this warning, in the most recent business survey conducted by the UK Chemical Industries Association (CIA), 60% of chemical businesses are experiencing falling sales with a further 20% seeing no growth. That’s on top of data released from the UK Office of National Statistics showing that chemical output has reached the lowest level in over a decade.
The CIA identifies the main three challenges for businesses as the costs of energy, the cost of labour alongside weakening demand – with less than 10% of companies expecting these conditions to ease through 2025.
The CIA has its own research which looks at the current and near future resilience of the UK chemical sector. Chemistry has provided one of the pillars on which modern industrialised economies have been built in the last 150 years, it points out – but more must be done to create a resilient and sustainable future for the industry.
It’s an issue that SCI has been working on too, calling for the implementation of a new industrial strategy to support the commercialisation of innovative science and to help these companies grow in the UK. An approach that SCI calculates could create an additional £230bn in gross value added – and 240,000 jobs – by 2030 in the life sciences and clean tech sectors alone.
One big difference from REACH, of course, is that these new pressures aren’t likely to be applied globally: instead, lower prices for feedstocks and energy outside of Europe are making it easier for companies in the US and China to grow.
In the UK, energy costs look set to go even higher, and labour costs are already set to rise again as the Government’s increase in National Insurance kicks in from April. And this is before there is any real indication of how the threatened implementation of tariffs by the new US administration may impact the UK and European chemical industry.
Policy changes will be needed to support this key industry, whether to bring energy prices down or to help companies move to more sustainable feedstocks like renewable carbon. Europe has started down this route; the problem is that these interventions take time.
The experience of REACH shows that the industry can change, but these new challenges are much harder to tackle. Decisions made in the next few years will shape the form of the chemicals industry for decades to come.
Who knows what the chemical industry will look like in 2045: we can only hope for the future.
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