Key decisions impacting the future of the European chemical industry will be made at the European Council summit on March 19th, amid concerns of declining competitiveness.
The Importance of the Chemical Industry
The chemical industry is fundamental to the economy; even European Commission President Ursula von der Leyen has acknowledged it as the “industry of industries,” with chemical products being essential components of virtually all supply chains.
To maintain its production base and economic sovereignty, the European Union must ensure the survival of its chemical industry.
Critical Decisions Looming
Crucial decisions are expected this week: EU leaders will meet on March 19th at the European Council summit focused on economic competitiveness.
The European Commission has discussed issues extensively but has taken limited action on key matters: reducing excessive costs within the Emissions Trading System (ETS), protecting the market from non-EU competition, and supporting investment in plant modernization.
Declining Production Capacity
As a result, facilities are closing: according to CEFIC, the European chemical industry association, the EU has lost approximately 10% of its production capacity since 2022, with half of that loss expected by 2025—a trend that is accelerating.
The EU Bureaucracy as an Icebreaker
The Brussels administrative apparatus resembles a powerful but slow-turning icebreaker: any change in course is complex and lengthy, but once initiated, the machine will slowly move towards its designated goal.
Focus on Emissions Reduction at All Costs
Thus far, the primary goal has been reducing CO2 emissions in the EU, regardless of the cost.
Imposing emission charges on European industry has reduced emissions, but decarbonization is currently occurring largely through deindustrialization, as European firms face additional costs that their non-EU competitors do not, losing market share.
CO2 is emitted outside the EU, but still enters the same atmosphere.
Pressure on the Commission is Needed
EU officials will not change course independently; political pressure from member states is required.
Poland has been actively lobbying on this front, presenting a set of demands prepared by the Ministry of Foreign Affairs and the Ministry of Climate and Environment at the previous European leaders’ meeting, including changes to the ETS system.
Poland has built a broad coalition that presented a joint position on the chemical industry at the summit of EU economy ministers, possessing a blocking minority within the Council of the EU—a significant bargaining chip.
Industry Needs: Addressing Key Issues
The most pressing issue is the ETS system; between 2013 and 2025, it collected approximately €258 billion, of which around 75% returns to national budgets.
According to Commission estimates, only about 5% of these funds are reinvested in industrial transformation.
Energy-intensive industries need relief to compete on a level playing field with producers outside the EU and to rationally plan investments, which free emission allowances for vulnerable sectors are intended to provide, but their number is too small and allocations continue to decrease—a trend that needs to be halted.
Investment Support and Market Protection
The EU and member states have long subsidized the transformation of the energy sector through various support systems, while the industrial sector, with equally significant investment needs, has been left to fend for itself.
Existing funding sources promote only certain technologies—mainly hydrogen and direct electrification of industrial processes, which is not technologically feasible in many industries (especially those requiring high-temperature steam).
The chemical industry needs a technology-neutral support mechanism financing investments in decarbonization, as implemented by China, the USA, and France.
Critical Chemicals Alliance
The Commission has created the Critical Chemicals Alliance to identify critical chemical substances and production clusters for European supply chains, and then strengthen measures to protect and support them.
Polish firms like QEMETICA are actively involved, hoping for concrete solutions to protect chemicals with a significant share in domestic production.
A Call for Action
So far, the Brussels icebreaker threatens to crush the industry rather than clear its path.
If Poland and other countries firmly demand change on Thursday, the European Commission will have to correct its course—before it is too late.