Europe's chemical industry, once a powerhouse of innovation and production, is teetering on the brink of collapse—and the reasons are as alarming as they are complex. Skyrocketing energy costs and a regulatory maze are strangling the sector, forcing companies to shutter plants, slash jobs, and flee to more hospitable markets. But here’s where it gets even more troubling: this isn’t just about one industry. Chemicals are the backbone of countless other sectors, from automotive to defense, meaning Europe’s entire industrial ecosystem is at risk.
Last year alone, investments in the European chemicals industry plummeted by a staggering 80%, according to a Financial Times report (https://www.ft.com/content/6d7dee96-4d6f-431c-a229-b78f9298f1ef) citing data from the European Chemical Industry Council (Cefic). The same report revealed that capacity shutdowns topped 5 million tons, with a jaw-dropping sixfold surge since 2022. By 2025, closures had reached 37 million tons—a whopping 9% of total capacity. The human cost? Over 20,000 jobs lost. And this is the part most people miss: new investments have all but dried up, pushing the industry closer to the edge.
Marco Mensink, head of Cefic, paints a dire picture: “The sector is under severe stress and breaking. The rate of closures has doubled in a year, and annual investments are close to zero. We need decisive action now, with tangible results on the factory floor.” But will anyone listen?
At first glance, the industry’s 2024 sales of over 600 billion euros might seem robust. Yet, Europe’s global market share has shrunk dramatically—from over 27% in 2004 to a mere 12.6% today. And this decline didn’t happen in a vacuum. The EU’s sanctions on Russia, coupled with the loss of cheap pipeline gas, have dealt a crippling blow. For an industry reliant on petroleum feedstocks and energy-intensive processes, soaring energy costs are nothing short of catastrophic.
But energy costs are just one piece of the puzzle. The EU’s relentless focus on emission reduction, while well-intentioned, has saddled businesses with regulations that prioritize environmental goals over competitiveness. This has left European companies struggling to compete with global rivals, particularly China, which operates with fewer restrictions and cheaper energy. The carbon border adjustment mechanism (CBAM) was meant to level the playing field by taxing cheaper imports from countries with laxer emission standards. But is it too little, too late?
China, meanwhile, is aggressively expanding its chemical production, often building capacity that outstrips demand. Take monoethylene glycol, a key polyester component—Chinese companies are flooding the market, putting immense pressure on high-cost European producers. And now, with the U.S. emerging as a low-cost competitor following last year’s trade deal, Europe is caught in a vise.
The fallout is already visible. Saudi SABIC has divested its European assets, Dow is closing plants in Germany, and Exxon is reportedly eyeing an exit from the region. Even more alarming, two chemical producers have filed for insolvency for several subsidiaries. The question is: Can Europe afford to lose this industry?
Chemicals are the “mother of all industries,” as Mensink aptly puts it. Without them, sectors like automotive and defense—both critical to Europe’s future—are in jeopardy. “It’s a chokehold the rest of the world has on Europe,” he warns. And yet, the solutions remain elusive. Unless policymakers fundamentally rethink their priorities, dethroning emission reduction as the top concern, the industry’s decline may be irreversible.
But here’s the controversial part: Is Europe’s green agenda worth sacrificing its industrial backbone? Or is there a middle ground that balances environmental goals with economic survival? We’d love to hear your thoughts in the comments. The clock is ticking, and the stakes couldn’t be higher.
