High Energy Prices, Regulatory Complexity Raise Specter of EU Deindustrialization

The European chemical industry is at a critical juncture, grappling with high energy prices, weak demand, and a complex regulatory environment that threatens its global competitiveness. According to CEFIC, the European Chemical Industry Council, urgent policy interventions are required to prevent long-term damage, including deindustrialization in key parts of the sector.

Faced with high business costs in Europe, the 2025 CEFIC-Advancy Competitiveness Report found that 11 million metric tons of capacity were announced for closure in Europe between 2023 and 2024. As of 2025, 40% of the EU’s ethylene crackers face closure and major international companies are reviewing and, in some cases, shutting down their European assets. Most prominently, Dow plans to close an ethylene cracker in Böhlen, Germany; chlor-alkali and vinyl assets in Schkopau, Germany; and a basics siloxanes plant in Barry, UK. Chemical business Versalis is on track to complete the shutdown of two crackers in Italy by the end of 2025, and TotalEnergies is shutting down a Belgium cracker by the end of 2027, among others.

In its recent Q1 update, CEFIC highlighted a combination of structural and cyclical challenges affecting the industry: persistently high energy costs, sluggish demand both within and outside Europe, and regulatory fragmentation across EU member states. These factors are further exacerbated by increasing global competition, particularly from regions with lower energy and regulatory costs.