Industry welcomes EC action plan

The European Commission (EC) has presented its Action Plan for the Chemicals Industry, as promised in May, with a view to strengthen the competitiveness and boosting the modernisation of the sector by addressing issues like energy costs, global competition and weak demand. The measures are expected to save the industry €363 million/year. Industry bodies have welcomed it. 

The plan builds on the EC’s Competitiveness Compass and Clean Industrial Deal and seeks to establish a Critical Chemical Alliance with member states and stakeholders. This will address the risks of capacity closures by identifying critical production sites needing policy support and tackle trade issues like supply chain dependencies and distortions.

The EC will also apply trade defence measures to ensure fair competition while expanding chemical import monitoring through the existing Import Surveillance Task Force. Other proposed measures include:

• Implementing the EC’s Affordable Energy Action Plan to reduce energy and feedstock costs, among other means by clarifying the rules for low-carbon hydrogen and updating state aid to reduce electricity costs for more chemical producers
• Using clean carbon sources such as carbon capture, biomass and waste alongside support for renewables
• Offering fiscal and tax incentives and to boost demand
• Minimising per- and polyfluoroalkyl substance (PFAS) emissions 

Alongside the Action Plan is a ‘simplification omnibus’, which seeks to streamline and simplify key legislation and strengthen the governance and financial sustainability of ECHA. This includes, among other things simplifying hazardous chemical labelling rules, clarifying cosmetics regulations and easing registration for fertilises by aligning the information requirements with standard REACH rules for chemicals.

CEFIC described the plan as “an important and timely first step toward boosting the competitiveness and resilience of the EU chemical industry. Meanwhile, Germany’s chemical industry association, the VCI, said that the plan and the omnibus together “mark a political turning point but also contain concrete measures to strengthen Europe’s chemical industry”.

When combined with the state aid framework of the Clean Industrial Deal and the pending review of the Emissions Trading System to include more chemical sectors, said Ilham Kadri, CEFIC president and CEO of Syensqo, the plan is “a game-changer to lower electricity costs for industry in Europe. Now we need swift implementation and strong political coordination across the EU to turn this momentum into results.”

Noting that 5% of Europe’s chemical capacity was shut down in 2023 alone and further shutdowns are still in progress, CEFIC added that coordinated action by member mtates is now urgently needed to turn “crucial signal to global investors” into concrete results. “Each day of inaction further weakens European industry.”

“It is crucial to see the Chemical Industry Action Plan in the wider context of announcements of the EC,” added director-general Marco Mensink. “The chemical industry omnibus, the ECHA founding regulation, the clarity on chemical recycling, the future of hydrogen in Europe, the focus on critical chemicals, the greening of VAT and the simplification of REACH are all key building blocks for a better future.” 

Markus Steileman, VCI president and CEO of Covestro, said that that the Action Plan makes it clear that the chemical industry is “indispensable for Europe's industrial future”, while also highlighting past policy failings. “For years, the sector has been hindered by regulatory obstacles. The omnibus is now clearing away some initial issues,” he said.

In this context, Steileman highlighted the planned withdrawal of recently amended regulations about font size on packaging, which would have otherwise caused hundreds of millions of euros in unnecessary additional costs. “In the next step, laws regarding approval procedures, emissions trading or wastewater regulation should be swiftly and decisively adapted.”