European Industries Warn EU Chemicals Measures Could Raise Costs and Weaken Competitiveness

A coalition of European manufacturers, retailers, wholesalers and downstream chemical users has warned Brussels that measures intended to support low-carbon chemical production could undermine the competitiveness of the companies expected to purchase and transform those materials.

In a joint statement the organisations backed the European Union’s objective of strengthening the resilience and decarbonisation of its chemical industry. However, they urged policymakers to assess the consequences across the full value chain before introducing mandatory demand-side obligations.

The intervention comes as the Critical Chemicals Alliance examines how Europe can protect strategically important production, modernise industrial sites and create markets for cleaner chemicals. The European Commission established the initiative amid concern over plant closures, high energy costs, global overcapacity and growing competition from producers outside the bloc.

The signatories include APPLiA, representing the home-appliance industry; the European Council of the Paint, Printing Ink and Artists’ Colours Industry; Cosmetics Europe; Detergents Europe; the Downstream Users of Chemicals Co-ordination Group; and EuroCommerce, which represents the retail and wholesale sectors.

Concerns Over Mandatory Demand Measures

The dispute centres on potential “market-pull” mechanisms discussed by the alliance’s working group on lead markets. These could include minimum content requirements, levies, tradable certificates, carbon-related extended producer responsibility schemes and obligations to report product carbon footprints.

Such policies are designed to create demand for low-carbon chemicals and sustainable feedstocks, giving producers greater certainty to invest in cleaner European capacity. Downstream industries, however, argue that poorly designed requirements could transfer costs and administrative responsibilities to businesses with limited influence over upstream production.

“An industry cannot build a sustainable business case by making its customers less competitive,” the coalition said.

Companies that formulate, manufacture, distribute or sell chemical-based products often manage extensive portfolios involving suppliers across several countries. According to the statement, many of these businesses cannot independently verify environmental information generated further up the supply chain.

Requiring them to assume responsibility for data or production decisions beyond their control could create an imbalance between obligations and operational authority, the organisations warned.

The coalition also said cleaner materials generally carry a “green premium” over conventional alternatives. Additional requirements for traceability, certification, auditing, verification and information technology would generate further expenses.

Those costs would either reduce the margins and investment capacity of European companies or be passed on through higher prices, with potentially greater effects on small and medium-sized enterprises and lower-income households.

Industry Calls for Impact Assessment

The signatories said the potential economic and administrative effects of the measures have not yet been sufficiently assessed across the entire value chain.

They called for further examination of consumer affordability, sustainable feedstock availability, technical feasibility, product performance, safety, traceability and the capacity of authorities to enforce equivalent standards on imports.

The treatment of foreign products is a central concern. European downstream companies fear that domestic obligations could place them at a disadvantage if imported finished goods are not subject to comparable requirements or if enforcement at the EU border proves ineffective.

The coalition also warned that new horizontal rules could overlap with existing and forthcoming European legislation, creating duplicated or contradictory compliance requirements.

It asked the European Commission to ensure that responsibility for environmental information remains with the companies that generate and control the relevant data and production decisions.

Incentives Before Obligations

Rather than immediately mandating demand for low-carbon chemicals, the signatories want the EU to prioritise policies that reduce the cost and risk of industrial investment.

Their preferred options include direct investment support, research and innovation funding, targeted public procurement, greater access to sustainable feedstocks, voluntary partnerships across the value chain and Contracts for Difference. The latter could help bridge the price gap between conventional and cleaner chemical production.

The position does not reject the decarbonisation of Europe’s chemical sector. Instead, it reflects a growing debate over how the costs of the transition should be distributed among producers, industrial customers, retailers and consumers.

The chemical industry sits near the beginning of numerous European value chains, supplying materials used in appliances, paints, cosmetics, detergents, packaging and a wide range of manufactured goods. Measures affecting chemical production can therefore spread rapidly across the wider economy.

The coalition argues that Europe will not secure a viable market for cleaner domestic chemicals if the companies expected to buy them face excessive costs, bureaucracy or competitive disadvantages.

Its message to Brussels is that protecting strategic chemical production and preserving downstream competitiveness must be treated as part of the same industrial policy. Without that balance, measures intended to strengthen European resilience could instead weaken demand, investment and public support for the transition.