Key takeaway
What This Development Means
A coalition of eight EU countries has proposed an EU Critical Chemicals Act to stabilise the struggling chemical industry. With production down 12% since 2019, the legislation aims to secure 15 strategic chemicals vital to manufacturing, energy, and healthcare. If implemented, it could boost funding, protect jobs, and reshape European supply chains.
What is the EU Critical Chemicals Act?
The EU Critical Chemicals Act is a proposed regulatory framework designed to protect key chemicals essential for European manufacturing. It aims to support local production, reduce import dependency, and provide financial aid for decarbonisation and modernisation in the chemical industry.
How will the EU Critical Chemicals Act impact manufacturers?
Manufacturers using ethylene, ammonia, methanol, and other critical chemicals may see increased production incentives within the EU. However, businesses relying on imports from non-EU suppliers could face higher costs if new trade restrictions or incentives alter supply dynamics.
Eight European countries have called for an EU Critical Chemicals Act to combat the chemical industry’s decline. With production dropping by 12% since 2019, leaders from France, Italy, Spain, and others demand urgent regulatory intervention to support 15 strategic chemicals essential for manufacturing, pharmaceuticals, and energy sectors.
EU Chemicals Industry Faces Crisis
The joint statement from Czech Republic, Hungary, Italy, Netherlands, Romania, Slovakia, Spain, and France warns that without action, 20 steam crackers could shut down by 2035, costing 50,000 jobs. High energy costs, raw material price gaps, and unfair international competition have left European chemical plants vulnerable.
The European Commission’s upcoming “Clean Industrial Deal” and “Chemical Industry Package” are expected to introduce new support mechanisms, but industry leaders argue they do not go far enough. Instead, they are pushing for a dedicated Critical Chemicals Act, mirroring the Critical Raw Materials Act, to maintain Europe's industrial resilience and supply security.
Strategic Chemicals At Risk
The proposed legislation would protect 15 key chemicals essential to multiple industries, including:
Ethylene, propylene, and butadiene – Used in plastics, automotive, and construction.Ammonia and methanol – Critical for fertiliser production and energy applications.Chlorine and sodium hydroxide – Needed for water treatment, hygiene, and pharmaceuticals.Sulfur, silicon, and sodium carbonate – Key for battery production, electronics, and agriculture.
According to the statement, import reliance has skyrocketed, with some materials—like sodium carbonates and butadiene—seeing a 70–100% price gap compared to non-EU producers. Without state support, Europe's competitiveness could further decline, leading to increased reliance on non-EU imports.
Implications For Manufacturers
If the EU Critical Chemicals Act is implemented, chemical manufacturers may gain access to funding for decarbonisation, modernisation grants, and trade protections. However, businesses that rely on imported chemicals may face higher regulatory costs or supply chain adjustments.
Additionally, manufacturers in automotive, construction, healthcare, and agriculture must prepare for potential supply shifts if certain chemicals receive priority production incentives within the EU. Companies should assess their exposure to chemical supply risks and explore alternative sourcing strategies to stay competitive.
Call To Action For Industry Leaders
Chemical producers and downstream industries should engage with policymakers to ensure their needs are considered in upcoming EU industrial policies. Businesses can also explore sustainability grants and supply chain diversification strategies to mitigate potential disruptions.
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