Oxford Economics’ document for INEOS describes why the European chemical industry is going through severe and sustained contraction. Structural pressures, mainly high energy prices, carbon costs, regulatory and allowing burdens, are eroding competitiveness relative to the US, China, and the Middle East.
Between 2019 and 2025 Q2, the European chemical sector’s output declined notably. It has reduced by 30% in the UK, 18% in Germany, 12% in France, and seven% in Belgium. Structural pressures—chiefly high energy and carbon costs along regulatory and allowing burdens—are undermining the sector’s viability.
Falling output ranges and decrease profitability is causing European chemical corporations to cut their investment relative to their global competitors. Between 2019 and 2024, the average yearly development in European chemical companies’ investment spending was half of the price of their US counterparts (1.5% as opposed to 3.0%). This trend is projected to preserve over the following decade. This will further adversely effect the sector’s competitiveness.
Emissions data recommend that, if European chemicals manufacturing is replaced by imports from China and the US, total carbon emissions will increase.
Chinese and US chemical industries release round threefold and twofold extra carbon for the equal volume of output, respectively, than the ones in Europe. The extra distances needed to delivery the imports may even add to the greenhouse gas emissions.
European policymakers confront a essential choice: act decisively now to guard this essential strategic industry or chance its irreversible decline.
