Europe unveils proindustry policy

The European Commission (EC) has unveiled details of a draft body of legislation, named the Clean Industrial Deal, designed to keep the chemical sector and other industries competitive while reducing their carbon footprints. While companies generally welcome the draft policy, Ineos chairman Jim Ratcliffe warns in a letter to politicians that a failure to fully support Europe’s petrochemical sector will render it “extinct.” The Clean Industrial Deal follows substantial pressure from the European Chemical Industry Council (Cefic), an industry group, to replace existing European Union (EU) legislation, which it blames for causing a wave of plant closures. A key problem with current legislation is that it exposes industry to high energy costs and substantial carbon emission taxes, according to Cefic. In a copy of the draft policy seen by C&EN, the commission states that affordable energy will be a cornerstone of the Clean Industrial Deal and that “clear business incentives” will be offered to help companies decarbonize. In another shift, circular production systems will become a priority. The draft policy satisfies “nine out of ten” of the chemical industry needs set out a year ago by Cefic and other European industry groups, Cefic president and Syensqo CEO Ilham Kadri says in a press release. Kadri wants the policy to be introduced as soon as possible. “In the turbulent times we are in we need bold action from the European Leadership,” she states. Kadri was among some 400 business leaders who gathered in Antwerp, Belgium, on Feb. 26 to meet with European Commission president Ursula von der Leyen to press her to finalize the Clean Industrial Deal without delay. EU member state leaders are due to discuss the deal next month. “We call on all new EU initiatives to be evaluated against the following criteria: Do they keep Europe safe and independent, reduce energy prices, ease the administrative burden on companies, attract investments to Europe, create markets for sustainable products, and safeguard quality jobs in Europe? If the answer to any of these questions is no, EU policymakers should reconsider and revise the proposal accordingly,” Cefic states. A recent study by Cefic found that in 2023 and 2024, chemical companies announced the closure of more than 11 million metric tons per year of production capacity across 21 major European sites. The European petrochemical industry will not survive if the new policy fails to reduce the burden of regulation, Ratcliffe says in his letter. He gives the example of Ineos’s site in Cologne, Germany, which employs 10,000 workers. The site’s annual gas bill is $105 million higher than it would be in the US; its electricity bill is $42 million higher; and it has a carbon tax bill approaching $105 million, he states. Environmental groups aren’t happy with the draft deal. The European Environmental Bureau, which represents over 180 organizations across Europe, criticizes the policy for failing to consider the full environmental impact of chemical production. “The so-called ‘Clean’ Industry Deal focuses on decarbonisation but overlooks broader pollution and environmental responsibility,” Christian Schaible, head of Zero Pollution Industry for the bureau, says in a press release. “Fossil-fuel-reliant industries that resisted change for decades have secured a front-row seat in shaping this deal.” Paul Hodges, chairman of New Normal Consulting, cautions that a policy shift will not save Europe’s petrochemical industry in the long term. On top of its Europe-specific problems, there is global overcapacity, and the region’s aging population is consuming less, resulting in a drop in regional demand for commodity chemicals, he says.