EU Unveils Chemical Industry Action Plan

Currently, Europe's chemical industry stands at a crossroads, facing multiple challenges such as plant closures, declining market share, and reduced investment. In response to this difficult situation, the European Commission will introduce a series of measures to enhance the competitiveness of Europe's chemical industry.

On July 8, the European Commission unveiled a Chemical Industry Action Plan aimed at addressing high energy costs, global competition, and weak demand in the sector, while promoting investment in innovation and sustainability.

The plan aims to strengthen the competitiveness of the EU chemical industry and drive its modernization. In a statement, the European Commission said the Chemicals Industry Action Plan is accompanied by a "Simplification Omnibus," designed to streamline EU legislation on key chemicals, and a proposal to strengthen the governance and financial sustainability of the European Chemicals Agency (ECHA).

The European Commission plans to establish a Critical Chemicals Alliance with member states and stakeholders to address the risk of capacity closures in the chemical industry. The alliance will identify key production sites requiring policy support and tackle trade issues such as supply chain dependencies.

In addition, the European Commission will implement trade protection measures and expand monitoring of chemical imports through the existing Import Monitoring Working Group.

As part of the action plan, the Commission proposes another measure: implementing the Affordable Energy Initiative to help reduce high energy and raw material costs. This initiative will extend indirect cost compensation under the EU Emissions Trading System (ETS) to more chemical products and support low-carbon hydrogen to foster a hydrogen economy.

The action plan also encourages the use of clean carbon sources such as carbon capture, biomass, and waste, while supporting the development of renewable energy.

The plan emphasizes introducing financial incentives and tax measures to boost demand for clean chemicals and reaffirms the Commission’s commitment to reducing emissions of per- and polyfluoroalkyl substances (PFAS).

The European Commission stated that, as part of its ongoing efforts to strengthen EU competitiveness, the Simplification Omnibus aims to reduce compliance costs and administrative burdens for the chemical industry while ensuring strong protection for human health and the environment.

The Simplification Omnibus includes streamlining labeling rules for hazardous chemicals, clarifying the EU cosmetics regulation, and simplifying the registration of EU fertilizer products by aligning information requirements with the standard rules of the EU Registration, Evaluation, Authorisation and Restriction of Chemicals (REACH). The Commission estimates these measures will save the chemical industry at least €363 million annually.

In response to the newly released plan, the European Chemical Industry Council (Cefic) stated in a press release that it represents an important step toward enhancing the competitiveness and resilience of the EU chemical industry. The priority now is swift implementation and stronger political coordination across the EU to turn the plan into tangible results.

The German Chemical Industry Association said the action plan marks a "political turning point." It includes specific measures to strengthen Europe's chemical industry—for example, the planned repeal of regulations on packaging font sizes, which had imposed additional costs of hundreds of millions of euros.

It is reported that the chemical industry is the fourth-largest manufacturing sector in the EU, comprising 29,000 companies, providing 1.2 million direct jobs, and supporting 19 million indirect jobs across the supply chain.