EU's Chemicals Industry Action plan published

COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN

PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL

COMMITTEE AND THE COMMITTEE OF THE REGIONS

A European Chemicals Industry Action Plan

Strasbourg, 8.7.2025

COM(2025) 530 final

The chemical industry is the industry of the industries. As the EU’s fourth largest manufacturing industry, it contributes to over 96% of manufactured goods, making it a cornerstone of the EU’s industrial resilience and competitiveness. Chemicals are crucial for a wide range of applications in strategic sectors such as defence, cleantech and digital. Europe therefore needs to keep a strong chemicals industry.

Yet today, the sector also faces significant challenges that threaten its competitive position and resilience. Its global market share has declined by over 50% since 2003, with other regions, such as China, emerging as major players. High energy and feedstock prices, geopolitical tensions, and low market demand have eroded the competitiveness of EU- based producers, leading to declining production utilisation rates. The past two years witnessed the announcement of closures of more than 20 major production sites in the

EU, including steam crackers and other upstream facilities used for producing fundamental building blocks.

This Action Plan builds on the Competitiveness Compass, the Clean Industrial Deal and the Strategic Dialogue with the Chemical Industry, held by President von der Leyen on 12 May 2025. It sets out concrete measures to help secure the global competitiveness of the European chemicals industry, to maintain a strong European production base and to upgrade it through action in four key areas:

1) strengthening resilience: maintaining critical production in EU and opening new markets and protecting the EU industry

2) securing energy supply, supporting decarbonisation and shift towards clean and circular economy;

3) creating lead markets and promoting innovation; and 4) simplifying the regulatory framework.

1.- Maintaining critical production in the EU

The EU must maintain and upgrade its core chemical production capacity, to strengthen its competitiveness and preserve its resilience. The primary building blocks, such as petrochemicals, ammonia and chlorine are the foundation of numerous value chains, from pharmaceuticals to batteries. Yet, the EU has lost at least 8-10% of its cracking capacity over the last three years, with potential future closures bringing the total loss to more than

20% of the 2021 capacity. Most remaining EU crackers, concentrated in a few regions andoften integrated with oil refineries, are outdated, rely heavily on naphtha as a primary feedstock, and are less efficient than their global competitors.

To preserve and modernise strategic production capacities and value chains, decarbonisethe sector, reduce dependencies10 and attract the right skills, the Commission will establish a Critical Chemicals Alliance

The Alliance will help develop criteria for identifying chemical sites and molecules that are critical for the EU’s strategic objectives.

Third, the Commission will assist Member States and regions in designating EU Critical Chemical Sites

2.- International trade: opening new markets and protecting the EU

industry

The European chemical industry is a leading exporter and a key contributor to Europe’s trade balance. In 2023, the value of chemical exports from the EU, excluding pharmaceutical and medicinal products, reached EUR 285 billion, compared to EUR 241 billion in imports. Its trade surplus is mainly attributed to the downstream segments (consumer and specialty chemicals), polymers and chemical intermediates, whereas its trade deficit in the upstream segments reflects the EU’s dependence on imported energy and feedstock carriers (fossil energy and feedstocks, bio-based feedstocks) used to produce

other chemicals.

Key points:

Securing access to export markets

Trade defence

Customs and market surveillance

3.- SECURING AFFORDABLE ENERGY SUPPLY AND SUPPORTING DECARBONISATION

High energy prices are significantly undermining the cost-competitiveness of EU based chemicals producers. Energy accounts for about 75% of production costs in the EU petrochemicals sector. Natural gas makes up over 70% of the variable costs of ammonia, while electricity accounts for over 60% of production costs in industry. Enhanced investment in interconnections and supply chains with Southern Neighbourhood partners under the New Mediterranean Pact will be a key asset.

Critical:

Securing affordable energy supply: Faster permitting and Hydrogen

Supporting decarbonisation and the shift to a circular economy: EU financial support, Bioeconomy and biomass, Support for circularity, Carbon Capture, Utilisation and Storage (CCUS)

4.- LEAD MARKETS AND INNOVATION

The investments in non-fossil feedstocks and low-carbon technologies are often constrained by the lack of off-takers, rendering it difficult for frontrunner companies to reap the “green premium” and capitalise on investments. Therefore, within the logic of the upcoming reform of the public procurement, the Industrial Decarbonisation Accelerator Act will introduce EU content requirements, in line with the Union’s international legal commitments, as well as resilience and sustainability criteria with the objective to foster and safeguard clean European supply of energy-intensive products and European demand for downstream industries.

Taxation can contribute to develop innovative, low-carbon solutions for the EU chemicals industry. To support this objective, the Commission has put forward the Commission Recommendation on Tax Incentives to support the Clean Industrial Deal.

Critical points:

Innovation: Up to date chemical safety assessments,

5.- SIMPLIFYING AND STREAMLINING THE REGULATORY FRAMEWORK

Critical points:

Omnibuses and Taxonomy

ECHA Regulation

Providing clarity on PFAS

Occupational Safety and Health