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, an area 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 plant utilization rates have lingered 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 pioneer in climate policy—indeed, a pioneer. 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, department, 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 also tightly 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 even 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 cuts did not hinder growth in chemical production capacity: actual chemical output across the EU-27 rose by 43%. Does this suggest emissions reduction and production expansion are not inherently incompatible? After 2015, however, EU chemical production capacity and emissions began declining 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 investing in technological upgrades and energy structure transitions—but face enormous capital expenditure requirements and operational model overhauls. Third, tightening government regulation is suppressing corporate innovation and investment vitality. Green and Socialist parties in the European Parliament continue pushing for ever-higher environmental and health standards—and have even rejected EU proposals aimed at revitalizing the chemical industry. On April 3, 2025, the EU’s Committee for Risk Assessment (RAC) proposed revisions to the REACH Regulation (Registration, Evaluation, Authorisation and Restriction of Chemicals), prompting objections from the European Chemical Industry Council (Cefic), the European Construction Chemicals Association, and the National Fragrance Association. These three organizations argue that the proposed amendments seriously undermine the EU’s policy implementation to enhance industrial competitiveness—and may disproportionately impact small and medium-sized enterprises (SMEs).

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

• Resins 1. Bisphenols Europe: A Cefic sector 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 sector 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 resin-related sector groups/associations, RTP collectively represents over 100 companies. 8. SRM (Solvent Resins Manufacturers): A Cefic sector group representing European manufacturers of solvent-based resins. It currently has 11 members. 9. UV/EB Acrylates Sector Group: Represents producers of UV/EB-curable 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 (UPR) and vinyl ester (VE) resins—key materials in wind energy, construction, and infrastructure applications. European Petrochemical Association — petrochemistry.eu/

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