EU Unveils Chemicals Industry Action Plan

Currently, Europe's chemical industry is at a crossroads, facing multiple challenges such as plant closures, declining market share, and reduced investments. In response to this severe situation, the European Commission will introduce a series of measures to enhance the competitiveness of Europe's chemical industry.

On July 8th, the European Commission announced a chemicals industry action plan aimed at addressing the issues of high energy costs, global competition, and weak demand faced by the chemical sector, while promoting investment in innovation and sustainability.

The goal of this plan is to strengthen the competitiveness of the EU's chemical industry and drive its modernization. In a statement, the European Commission noted that the *Chemicals Industry Action Plan* is accompanied by a "Simplification Package" intended to streamline EU legislation on key chemicals, as well as a proposal to strengthen the governance and financial sustainability of the European Chemicals Agency (ECHA).

The European Commission plans to establish a Critical Chemicals Alliance with member states and stakeholders to address the risk of capacity closures in the chemical industry. This alliance will identify key production sites in need of policy support and tackle trade issues such as supply chain dependencies.

Furthermore, the European Commission will adopt trade protection measures and expand supervision over chemical imports through existing import monitoring working groups.

As part of the action plan, another measure proposed by the European Commission is the implementation of the *Affordable Energy for Industry Initiative* to help reduce high energy and raw material costs. This initiative will extend the compensation for indirect costs under the EU Emissions Trading System (ETS) to cover more chemicals and support low-carbon hydrogen to build a hydrogen economy.

The action plan also encourages the use of clean carbon sources, such as carbon capture, biomass, and waste, while supporting the development of renewable energy.

It emphasizes the introduction of financial incentives and tax measures to boost demand for clean chemicals and reaffirms the European Commission's commitment to reducing emissions of per- and polyfluoroalkyl substances (PFAS).

The European Commission stated that, as part of ongoing efforts to enhance EU competitiveness, the Simplification Package aims to reduce compliance costs and administrative burdens for the chemical industry while ensuring strong protection of human health and the environment.

The Simplification Package includes streamlining hazardous chemical labeling rules, clarifying EU cosmetics regulations, and simplifying the registration of EU fertilizer products by aligning information requirements with the EU's Registration, Evaluation, Authorization, and Restriction of Chemicals (REACH) standard rules. The European Commission estimates that these measures will save the chemical industry at least 363 million euros annually.

In response to the newly released plan by the European Commission, the European Chemical Industry Council (Cefic) stated in a declaration that this is a crucial step in enhancing the competitiveness and resilience of the EU chemical industry. The top priority is to implement it swiftly and strengthen political coordination across the EU to translate the plan into results.

The German Chemical Industry Association noted that the action plan marks a "political turning point" and includes specific measures to strengthen Europe's chemical industry. For example, the plan intends to revoke regulations on the font size of packaging, which would have incurred additional costs of hundreds of millions of euros.

It is reported that the chemical industry is the fourth-largest manufacturing sector in the EU, with 29,000 companies, providing 1.2 million direct jobs and supporting 19 million indirect jobs in the supply chain.