BY STEVE RANGER
Europe’s chemical industry is looking to find a way out of its ongoing crisis, with governments and industry groups proposing plans to help a sector struggling with rising costs and tough competition.
For some time, Europe’s chemicals sector has been at a competitive disadvantage when compared with the US, China and the Middle East due to high energy, regulatory, labour and feedstock costs in an increasingly competitive market. Finding a solution hasn’t been easy.
In March 2025, a group of European countries, including the Czech Republic, Hungary, Italy, Netherlands, Romania, Slovakia, Spain and France, published their own plan, warning of the ‘alarming situation of the European chemicals industry’ and calling for a new EU Critical Chemicals Act that could support businesses and guarantee the local supply of chemicals vital to the growth of Europe’s economy.
The countries warned that Europe’s chemical industry is facing a major crisis, having experienced a 12% drop in production between 2019 and 2023. This they blamed mainly on energy costs and the cost of energy-intensive feedstocks as well as ‘fierce or even unfair’ competition from non-EU countries.
The price of natural gas is three times higher in Europe than the US, they said.
Looking just at petrochemistry, the group said that by 2035 around 20 steam crackers could shut down affecting 50,000 jobs, if no action was taken to help the industry work towards more sustainable production.
Moving to more sustainable processes is needed but expensive. ‘Full decarbonisation costs for a single steam cracker typically amount to more than a billion Euros – to which can be added tens of millions of annual operational costs for low carbon power or hydrogen, or carbon capture and storage, depending on the chosen technological route,’ the group said.
They said a Critical Chemicals Act would include a list of 15 strategic molecules they said are the ‘unavoidable building blocks’ required to feed Europe’s supply chains.
The proposed list of strategic molecules could include ethylene, propylene, butadiene, benzene, toluene and xylene, phenol, styrene, ammonia, methanol, chlorine, sodium hydroxide, sulfur, silicon, sodium carbonates, hydrofluoric acid, methionine and lysine.
‘A Critical Chemicals Act would in particular enable appropriate support schemes dedicated to the chemical plants that require decarbonisation and modernisation investments,’ the group emphasised - adding that the initiative also aims to support the chemical industry in the development of low-carbon molecules.
The European Chemical Industry Council, Cefic, has also issued its own 10-point ‘rescue plan’ for the chemicals sector, describing it as an industry ‘up against the wall.’
Cefic also warned that Europe’s chemical industry is in crisis and said that without immediate action more production sites will shut down, investments will move elsewhere – and Europe will fall further behind its global competitors.
Europe’s chemical industry is the foundation of its industrial ecosystem and every major value chain depends on it, said Cefic president Ilham Kadri: ‘Yet today, companies are halting investments in Europe while our global competitors race ahead. Without urgent action, we risk losing an entire industrial base. This is not just about chemicals; it’s about Europe’s economic and strategic future.’
Cefic also pointed to the combination of declining demand, soaring energy prices, and a growing regulatory burden and said that Europe’s chemicals industry needs ‘urgent and tailored’ support to restore its base.
The industry group said more needed to be done to secure local value chains for the chemicals used in the European defence industries, alongside measures to lower energy costs and a renewed urgency on trade protection. It also called for mass balance accounting rules for chemical recycling to be clarified and for more access to affordable feedstocks.
It also said there should be dedicated funding for the chemical industry in the EU Competitiveness Fund, Industrial Decarbonisation Accelerator Act and Industrial Decarbonisation Bank, including a research and innovation fund for demonstration plants.
‘The industry cannot afford just another round of discussions—it needs a clear plan to restore competitiveness, secure industrial jobs, and drive sustainable innovation in Europe, Cefic said.
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