Causes of the decline of Europe's chemical industry: Under triple pressure, its former industrial glory is unlikely to return.

Since 2021, Europe has shifted from being a net exporter to a net importer—especially in basic chemicals, a sector long overtaken by Asia. Cefic forecasts that approximately 15 million tonnes of chemical production capacity in Europe will be permanently shut down between 2024 and 2025—a mere two-year span. Beyond capacity closures, existing capacity utilization has languished around 75% for years—well below the historical average of 81%. Naphtha cracker utilization stands at only 74%, having remained below U.S. levels for multiple consecutive years—severely undermining industry profitability and reinvestment capacity. Second, stringent carbon neutrality policies have further exacerbated the situation, intensifying both operational costs and structural transformation pressures. Europe is a global forerunner in climate policy—indeed, a forerunner. In March 2020, the European Commission adopted the draft European Climate Law, explicitly setting a target of climate neutrality by 2050. The EU Emissions Trading System (EU-ETS) began pilot operations in 2005 and entered full implementation in 2008. This system has since become the core mechanism for controlling industrial emissions, covering 50% of the EU’s total carbon emissions. Complemented by carbon taxation, it forms the current energy-saving and emission-reduction policy framework. Between 2013 and 2023, revenue from EU-ETS allowances surged to €29.1 billion—such a lucrative regulatory business is one no country, agency, or official would willingly relinquish; yet who truly cares how much this has increased corporate carbon costs? The EU’s Carbon Border Adjustment Mechanism (CBAM) is closely integrated with its carbon market and will enter full implementation in January 2026. High-carbon-emission products—including organic chemicals—fall squarely within its scope. Importers of CBAM-covered goods must report carbon emissions quarterly and purchase corresponding certificates—raising compliance costs for chemical products and erecting higher trade barriers. In 2022, the EU’s total greenhouse gas emissions were 153 million tonnes of CO₂ lower than in 1990—equivalent to a 50% reduction. Yet these emission reductions did not hinder growth in chemical production capacity: actual chemical output across the EU-27 rose by 43%, suggesting emissions reduction and production expansion are not inherently incompatible. However, since 2015, both EU chemical capacity and emissions have declined in tandem—indicating that environmental policies are increasingly constraining industrial activity. Major European chemical enterprises—including BASF, Dow, and AkzoNobel—have all pledged carbon neutrality targets for 2030–2050. To meet these goals, companies are pursuing technological upgrades and energy structure transformations—but face immense capital expenditure requirements and operational model overhauls. Third, tightening government regulation is suppressing corporate innovation and investment vitality. Green and Social Democratic parties in the European Parliament continue pushing for ever-higher environmental and health standards—and even rejected the EU’s proposed plan to revitalize the chemical industry. On April 3, 2025, the EU’s Committee for Risk Assessment (RAC) under the European Chemicals Agency (ECHA) proposed revisions to the REACH Regulation (Registration, Evaluation, Authorisation and Restriction of Chemicals). This proposal drew criticism from Cefic, the European Construction Chemicals Association, and the National Fragrance Association. These three organizations contend that the proposed amendments seriously undermine the EU’s policy implementation aimed at enhancing industrial competitiveness—and may disproportionately impact small and medium-sized enterprises (SMEs).

List of industry groups under the European Chemical Industry Council (Cefic).

• Resins 1. Bisphenols Europe: A Cefic industry group representing major European producers and users of bisphenols. It currently comprises eight members and eight associate members. 2. Silicones Europe (SiE): A non-profit trade association and Cefic industry group representing all major silicone producers in Europe. 3. Epoxy Europe: A Cefic sector group serving as a platform for dialogue among Europe’s leading epoxy resin manufacturers. 4. Formacare (Formaldehyde Sector Group): Represents major European producers of formaldehyde, amino-plastic adhesives, and polyols. It currently has 22 full members and six associate members. 5. HARRPA (Hydrocarbon and Rosin Resins Producers Association): Represents European resin producers whose products are derived from both natural and petrochemical feedstocks. It currently has 12 members. 6. PPRM (Polyester Powder Resins Manufacturers): Represents manufacturers of polyester powder coatings—based on polyester resins that react with curing agents (crosslinkers), pigments, and additives. It currently has six members. 7. RTP (Resins Technical Platform): Composed of representatives from nine Cefic industry groups/associations involved in resin production. Collectively, RTP represents over 100 companies. 8. SRM (Solvent Resins Manufacturers): A Cefic industry organization representing European manufacturers of solvent-based resins. It currently has 11 members. 9. UV/EB Acrylates Sector Group: Focuses on UV- and electron-beam-cured acrylate resins—widely used as solvent-free binders in inks, varnishes, adhesives, and decorative/protective coatings. It currently has seven members. 10. The European UP/VE Resin Sector Group: Represents European producers of unsaturated polyester resins (UPR) and vinyl ester resins (VE), widely applied in wind energy, construction, and infrastructure sectors. European Petrochemical Association — petrochemistry.eu/

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