Europe’s chemical producers could see lower electricity costs along with a reduction in regulatory burden as part of Europe's new Action Plan for the Chemicals Industry. The European Commission described the series of measures as a “business plan to secure this critical sector’s future in Europe."
The plan aims to address key challenges for industry, including high energy costs, plus what is considered by European companies to be unfair global competition - and weak demand. It will also seek to promote investment in innovation and sustainability, as well as streamlining key European Union chemicals legislation. European chemicals companies have consistently warned that they are operating at a competitive disadvantage compared with the US, China and the Middle East due to high energy, regulatory, labour and feedstock costs.
The plan sets out measures to be taken across four areas.
To tackle industry resilience and establish a level playing field, the Commission has said it will set up a Critical Chemical Alliance. This will identify the critical production sites needing support, as well as tackling trade issues such as supply chain dependencies and distortions. The Critical Chemical Alliance also will also set out investment priorities and support EU production sites to boost innovation and growth.
Dealing with high energy costs and decarbonisation, the Commission said that the plan “will implement at full speed the Affordable Energy Action Plan,” which will help reduce high energy and feedstock costs. Along with clear rules for the use of low-carbon hydrogen there will also be an update to state aid to "lower electricity costs for more chemical producers by the end of the year.” The plan will also encourage the use of carbon capture, biomass and waste, along with support for renewables. A public consultation on improving chemical recycling has also been launched.
To boost innovation, the action plan highlights incentives to increase demand for clean chemicals. Along with the imminent Industry Decarbonisation Accelerator Act and the Bioeconomy Strategy and Circular Economy Acts, the Commission will also launch EU Innovation and Substitution Hubs, to accelerate the development of safer, more sustainable chemical substitutes.
The Action Plan will also have a specific focus on per – and polyfluoroalkyl (PFAS) substances, following commitments to minimise PFAS emissions through science-based restrictions. The Commission added that it will also invest in innovation, and promote remediation based on the polluter-pays principle.
Aside from these four specific actions, the Commission added that it will continue to reduce the compliance costs and administrative burden faced by the chemical sector, while ensuring that strong protection of human health and the environment are maintained. The Commission anticipates that simplifying hazardous chemical labelling rules, clarifying EU cosmetics regulations and easing registration for EU fertilising products by aligning information requirements with REACH, will save the industry at least €363 million each year.
“Today’s action plan on chemicals is our business plan to secure this critical sector’s future in Europe. It includes all levers to put the sector back on a growth track, from production-support measures to keep our steam-crackers and chemical sites in Europe, to trade defence instruments to protect our chemical businesses from unfair global competition, all the way to securing domestic demand for clean and “made in Europe” chemicals,” said Stéphane Séjourné, European Commission Executive Vice-President for Prosperity and Industrial Strategy.
Describing the Action Plan as “a serious effort from the European Commission to turn the tide for the “industry of industries”, European chemicals industry group Cefic said: “This [is] a crucial signal to global investors and the announced measure go beyond signalling support – they include concrete actions that set a strategies direction for European policymakers to reduce energy costs, ease regulatory complexity and support the transformation of the sector.”
Further reading:
• Future of chemicals industry on the agenda in discussion with European Commission
• Why science startups need more access to scale-up and testing facilities
• European Commission promotes development of safer chemicals and materials
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