25/03/20
Commission to engage on future of EU chemicals industry
London, 20 March (Argus) — The European Commission said it will actively engage
in strategic dialogue with the European chemicals industry to help it manage
high energy prices and the costs of modernisation and transition. Calls for
action and support have grown as more plant closures are announced and many
businesses and assets are considered at risk. "I believe we will be able to
develop a plan. It will take the necessary form, though I have no announcements
to make at this stage," Stephane Sejourne, the EU commissioner responsible for
prosperity and industrial strategy, told Argus. "We are starting at the level of
the commissioners. That being said, the industry will, of course, be present,
and we intend to develop sectoral plans with all stakeholders. We will need to
examine with stakeholders how we can modernise this sector and invest in it,
given the shrinking margins caused by international competition and the high
energy prices in Europe," he said. Sejourne said the plan is to "define the key
challenges and the possible shape of the relevant legislative texts, while
maintaining the same approach as with other sectors". Business plans will be the
priority of the discussions, rather than new sectoral regulations, he said,
adding that the aim is to enhance the competitiveness of the sector.
"Simplification, harmonisation, modernisation and financing will take precedence
over regulation," he said. Sejourne said he has discussed with EU ministers "the
urgent need to modernise steam crackers, which are over 40 years old in Europe".
These units are "environmentally inefficient, underperforming and do not enhance
the sector's competitiveness", he said. The chemicals industry will be "crucial"
for other industries, Sejourne said. "As part of the reindustrialisation efforts
that have been launched and the announcements made by the commission, we will
need the chemical industry." Critical Chemicals Act Sejourne's comments came
after eight European countries called for measures to support the production of
key chemicals in the EU as the bloc faces pressure from rising costs and
competition. The proposed "EU Critical Chemicals Act" would support the
development and decarbonisation of existing chemical plants while fostering
alternative carbon sources, the eight countries said. Signatory countries — the
Czech Republic, Hungary, Italy, the Netherlands, Romania, Slovakia, Spain and
France — highlighted 18 molecules as key to European strategic value chains,
five of which they labelled as critical. The list includes ethylene, propylene,
butadiene, benzene, toluene, xylene, phenol, styrene, ammonia, methanol,
chlorine, sodium hydroxide, sulphur, silicon, sodium carbonates, hydrofluoric
acid, methionine and lysine. Those singled out as critical were ethylene,
butadiene, benzene, ammonia and sodium carbonates. The signatories welcomed the
EU's recent "Clean Industrial Deal", a plan to turn decarbonisation into a
driver of EU growth, but argued that the chemical industry needs support to
successfully decarbonise. Full decarbonisation of a single steam cracker can
cost more than €1bn, highlighting the scale of investment required, the eight
countries said. The European Council adopted the Critical Raw Materials Act in
March 2024, which aims to protect supply chains for rare metals. Similar
measures are needed for the chemical industry because they are essential to core
industries including defence, health and construction, argued the signatories.
Plant closures have accelerated in Europe. Last year, ExxonMobil closed its
Gravenchon cracker in France and Sabic closed one of its two crackers in Geleen
in the Netherlands. Eni's Versalis subsidiary will close its two remaining
crackers in Italy this year. And US firm Dow has idled one of its three crackers
in Terneuzen in the Netherlands. At least three other crackers in the region
have been put for sale by their owners. Besides steam crackers, many more
chemical and downstream derivatives units have either been closed, are operating
at low rates or are up for strategic review or sale. By Alex Sands Send comments
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