The European Commission's 2025 Annual Single Market and Competitiveness Report, released in Brussels on 29 January 2025, underscores the critical challenges and opportunities within the chemicals regulation landscape. The report identifies regulatory burdens as a significant obstacle for the chemicals industry, impacting competitiveness and innovation across the EU.
Regulatory Burdens in the Chemicals Industry
The report highlights that the chemicals sector faces substantial regulatory challenges, particularly for small and medium-sized enterprises (SMEs). With 28% of SMEs dedicating over 10% of their staff to regulatory compliance, the complexity of chemicals legislation is a major concern. The report calls for simplification and harmonisation of regulations to reduce administrative burdens and facilitate innovation. "Businesses perceive the regulatory burden in Europe as too heavy," the report states, noting that 32% of EU firms identify regulations as a major obstacle to investment.
Impact on Investment and Competitiveness
The heavy regulatory burden in the chemicals sector is cited as a deterrent to investment. The report reveals that 41% of companies view increased regulatory complexity as a risk factor impacting the EU's attractiveness for foreign direct investment (FDI). This has contributed to a significant drop in the EU's share of global FDI flows, from 36% in 2019 to just 4% in 2023. Streamlining chemicals regulations is seen as crucial to reversing this trend and boosting competitiveness.
Harmonisation and Digitalisation Efforts
Efforts to harmonise and digitalise chemicals regulations are underway, with the aim of reducing fragmentation and improving efficiency. The report mentions the establishment of a single digital declaration portal, which could simplify compliance processes for businesses operating across multiple EU Member States. This initiative is expected to enhance transparency and reduce the time and resources spent on regulatory compliance.
Chemicals Regulation and Sustainability
The report also addresses the role of chemicals regulation in promoting sustainability. The Ecodesign for Sustainable Products Regulation, in force since July 2024, aims to incorporate circularity criteria into product design, including chemicals. This regulation is part of the EU's broader strategy to transition to a circular economy, reducing waste and promoting the use of sustainable materials. "Decarbonisation can also be an opportunity for European industry," the report notes, highlighting the potential for the EU to lead in the development of green chemicals and technologies.
Challenges and Opportunities
While the transition to sustainable chemicals presents challenges, it also offers opportunities for innovation and growth. The report highlights the potential for the EU to lead in the development of green chemicals and technologies. However, achieving this requires a regulatory environment that supports innovation while ensuring safety and sustainability.
