The collapse of the building-block tower: the structural collapse of Europe’s chemical industry continues to spread.

Net capacity contraction has reached 30.2 million tons, and the asymmetry—more shutdowns than new capacity additions—is expected to widen over the coming years. By sector, the upstream petrochemical segment has been hit hardest: its capacity shrank by 14% over four years, with 17.8 million tons shut down—accounting for 48% of total shutdowns. Just nine steam cracker units alone accounted for half of all shuttered capacity—directly undermining Europe’s ability to produce ethylene, propylene, and other foundational chemical feedstocks domestically. Geographically, the shutdown wave has swept across Europe. Germany shut down 8.8 million tons, the Netherlands 7.2 million tons, and the UK 0.5 million tons—making them the three most severely affected countries, together accounting for 57% of total shutdowns. III. A structural crisis driven by the convergence of four major factors Europe’s chemical industry crisis is not a short-term phenomenon but the result of four interlocking structural forces. The cost trap: a double squeeze from energy prices and carbon costs. Marco Mensink, Director General of Cefic, stated that the crisis is no longer a midnight bell—it is full-blown collapse under extreme pressure. Shutdowns are accelerating; annual investment has halved—nearly collapsing to zero. Without decisive action, it will be too late. Data from LyondellBasell shows Rotterdam’s energy costs are triple those in the U.S., and European natural gas prices are two to three times higher than U.S. levels. If carbon trading policies tighten further, this cost gap could double. Current EU carbon prices hover around €80 per ton—and under existing policy, zero emissions will be permitted by 2039. These cumulative costs place European chemical plants at an absolute global cost disadvantage. The competition trap: market erosion under punitive carbon tariffs. External pressures are even greater—especially Asia’s continuous expansion of chemical capacity. In 2025, EU chemical imports from China approached €55 billion—a near 23% year-on-year increase—while the EU-China chemical trade deficit ballooned from €9.2 billion to €22.5 billion. In 2025, Europe’s share of the global chemicals market fell to 13%, while China led globally with 46%. INEOS shut down its phenol plant in Gladbeck, Germany. Its closure report attributed the decision to Europe’s exorbitant energy costs and punitive CO₂ taxation, which collectively eroded competitiveness against imported products from Asia-Pacific. “If regulators fail to wake up and act effectively, Gladbeck won’t be the first—and certainly won’t be the last.” Although the Middle East conflict has temporarily eased competitive pressure from Asian producers, the resulting surge in raw material prices is further battering Europe’s already fragile chemical industry. Some analysts argue that even if the Middle East conflict ends quickly, Europe’s underlying problems remain—and the crisis will inevitably return. The regulatory trap: the Green Deal accelerating deindustrialization. The relationship between Europe’s chemical industry and EU climate policy has grown increasingly strained. Cefic—ranked third among Brussels’ most influential lobbying groups by European chemical firms—ran subway advertisements in Brussels: “Feeling anxious? You should be.” “Europe is losing production bases, high-quality jobs, and strategic autonomy.” “Save our industry.” Markus Steilemann, CEO of Covestro, directly appealed to European Commission President Ursula von der Leyen at a conference in Antwerp: “Urgently reform the EU ETS—climate ambition must align with competitive reality.”

Europe’s chemical industry’s ‘self-rescue plan’: chemical giants say it’s ‘too little, too late, and largely ineffective’.

This Action Plan was launched as a comprehensive response to the current crisis facing Europe’s chemical industry, aiming to enhance competitiveness, drive modernization—and, crucially, prevent further capacity loss. The Plan seeks to address core challenges confronting Europe’s chemical industry: high operating costs, unfair competition, and weak demand—while encouraging increased corporate investment in innovation and sustainable development. To achieve its ultimate goals, the Plan outlines four key pillars of intervention: 1. Establish a ‘Critical Chemicals Alliance’ to halt further plant closures, identify and safeguard critical production sites, and implement trade defense measures. 2. Launch an ‘Affordable Energy Action Plan’ to reduce energy and raw material costs, alleviate pressure from high energy intensity, ensure globally competitive energy pricing in Europe, introduce tax incentives, and encourage investment in green chemistry. 3. Simplify regulations and lower compliance burdens through the ‘Sixth Omnibus Revision’, a package of measures streamlining and optimizing EU chemical regulations to cut red tape and boost corporate efficiency. 4. Accelerate innovation and green transition by supporting R&D and market deployment of clean chemicals and sustainable alternatives. The EU touts this as a ‘historic step forward’, deploying four coordinated levers: industrial alliances + energy cost reduction + regulatory simplification + green transformation. It claims the Plan can rescue Europe’s chemical industry from ‘systemic collapse’—and generate annual savings of at least $420 million for the sector. Yet European chemical giants and industry associations widely regard these measures as incapable of halting the ongoing ‘wave of shutdowns’. Tom Croft, INEOS Group’s Director of Corporate Affairs, bluntly stated: “The Chemicals Action Plan is too little, too late—and fails to address the real issues. America’s and China’s competitors have already seized the keys to Europe’s industrial foundations. While Europe remains stuck in talk, the U.S. and China have long since acted—this is precisely why capital, innovation, and jobs are relocating en masse.” Croft argues the Plan does nothing to resolve the two most urgent existential threats to Europe’s chemical industry: sky-high natural gas prices and soaring carbon allowance costs. Richard John Carter, independent advisor to BASF and former senior executive, contends that the EU’s two most effective tools—tariffs and carbon allowances—must be deployed immediately. Measures like affordable energy, decarbonization, and innovation, he notes, will take many years to bear fruit. European chemical associations broadly doubt whether this Plan can meaningfully improve the industry’s global competitiveness. Markus Steilemann, Chairman of Germany’s largest chemical association VCI, told reporters: “We’ve taken the first step—but over the coming months, we’ll need to see whether these measures actually deliver tangible results.”

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