EU seeks to revive chemical industry with action plan and simplification

Brussels – Four pillars and a simplification package for annual revenues of €363 million, to revitalise the European chemical industry which, according to Stéphane Séjourné, Executive Vice-President of the European Commission for Prosperity and Industrial Strategy, “is the mother of all industries, with over 96% of the goods produced depending on it.”. This is what the European Commission launched today. The aim is to strengthen the competitiveness and modernisation of the EU chemicals sector. In this sense, “the action plan addresses key challenges, namely high energy costs, unfair global competition and weak demand, while promoting investment in innovation and sustainability,” the EU executive states. The document is accompanied by an Omnibus Chemicals Simplification Package—the sixth presented by the Commission so far in this mandate—to streamline key EU chemicals legislation, as well as a proposal to strengthen the governance and financial sustainability of the European Chemicals Agency (ECHA). 

The action plan consists of four measures: resilience and a level playing field, energy, driving markets, and PFAS. In particular, with regard to the first measure relating to resilience and a level playing field, the creation of the Critical Chemicals Alliance stands out. In fact, the Commission will establish, together with Member States and stakeholders, a Critical Chemical Alliance to address the risks of capacity closures in the sector. It will identify critical production sites in need of policy support and address trade issues such as dependency and supply chain distortions. It will then ‘swiftly’ apply trade defence measures to ensure fair competition by expanding the monitoring of chemical imports through the existing Import Surveillance Task Force. The Alliance will align investment priorities, coordinate EU and national projects, including Important Projects of Common European Interest (IPCEI), and support critical EU production sites to promote innovation and regional growth. 

On the affordable energy and decarbonisation front, the Commission will implement “at full speed” the Affordable Energy Action Plan to lower the high costs of energy and raw materials. “It introduced clear rules for low-carbon hydrogen and will update state aid to reduce electricity costs for more chemical producers by the end of the year. The plan also encourages the use of clean carbon sources such as carbon sequestration, biomass and waste, as well as support for renewable energy,” the Commission pointed out, recalling that a public consultation on improving chemical recycling was also launched today. 

To move forward with innovation and lead the market, the Action Plan highlights tax incentives and fiscal measures to stimulate demand for clean chemicals. “The upcoming law on the decarbonisation accelerator for industry will define EU content and sustainability standards to support market growth and investments in clean technologies. The forthcoming Bioeconomy Strategy and Circular Economy Act will stimulate EU resource efficiency, recycling of chemicals and strengthen the market for bio-based and recycled alternatives to fossil inputs,” the Commission documents. In addition, Brussels will also launch EU innovation and substitution clusters and mobilise EU funding under Horizon Europe (2025–2027) to accelerate the development of safer and more sustainable chemical substitutes.

 The fourth element concerns perfluoroalkyl and polyfluoroalkyl substances (PFAS). Here, “the action plan reaffirms the Commission’s commitment to minimise PFAS emissions through a robust and scientifically sound restriction, while ensuring continued use in critical applications, under strict conditions, where no alternatives are available, which will be proposed swiftly after the ECHA opinion. The Commission will also invest in innovation, promote clean-up based on the ‘polluter pays’ principle and prioritise the development of safer alternatives.” Precisely on this aspect, Environment Commissioner Jessika Roswall reminded the press conference that “PFAS are a growing source of concern and there is an urgency to act”, and therefore, “today’s action plan supports the transition towards PFAS phase-out.” 

Meanwhile, today the Commission also presented a simplification package for the sector to reduce compliance costs and administrative burdens for the chemical industry. This includes simplifying rules on the labelling of hazardous chemicals, clarifying EU legislation on cosmetics, and simplifying the registration of EU fertiliser products by aligning information requirements with the REACH (Registration, Evaluation, Authorisation and Restriction of Chemicals) standard rules for chemicals. According to Brussels, these measures are expected to save the sector at least  €363 million per year. At the same time, the proposed ECHA basic regulation will provide the European Chemicals Agency with “the resources, flexibility, and structural adaptations necessary to fulfil the tasks under its growing mandate, which now includes responsibilities stemming from multiple EU regulations, in particular on classification and labelling, biocides, import and export of dangerous chemicals, waste management and water management.” 

Finally, in the eyes of Brussels, the chemical sector is “vital to the European economy”. It supports the production of almost all goods, providing essential materials and technologies to industries such as automotive, construction, healthcare, agriculture, clean technologies, and defence. “It is everywhere: from the batteries, powders, and materials that ensure our military defence, to the medicines and connected objects we use every day,” Séjourné said. For the executive vice president, “the stakes are high” and “supporting the chemical industry means supporting more than 90 per cent of the industrial value chain on which Europe’s competitiveness depends” and “means supporting 1.2 million direct jobs.” But the sector is “in trouble”, with “global sales of the European chemical industry declining by almost 50 per cent since 2003” and “the closure of more than 20 major sites in recent years.” 

The package presented today was slammed by the Greens in the European Parliament, with group president Bas Eickhout speaking of “health protection” being “overridden to increase the profits of the chemical industry.” According to Eickhout, “with this new proposal to deregulate chemicals, the European Commission is undermining transparency for consumers and, above all, endangering people and their environment.” And “the weakening of cosmetics legislation, in particular, is very worrying. By authorising the use of certain carcinogenic, mutagenic, and reprotoxic (CMR) substances in cosmetics and personal care products, hitherto banned, the Commission is creating a serious health risk for European citizens. This not only puts health at risk, but also erodes the trust of Europeans.” Furthermore, “by cancelling the rules on the labelling of hazardous substances, which were only adopted last year, the Commission is penalising companies that have made the necessary investments to comply with the new legislation, while rewarding those that are lagging behind.” 

And another ‘No’ came from the Socialists, with Christophe Clergeau, S&D Vice-President for the Green Deal, pointing out that “the Commission’s current approach to simplifying chemicals legislation is deeply worrying” and “the proposed measures are likely to increase exposure to chemicals that are dangerous to both people and the environment. Instead of continuing to allow the use of carcinogens and other toxic substances, the Commission should focus on incentivising and rewarding companies that invest in a sustainable, non-toxic economy.”