Chemicals Industry Action Plan: How the EU Seeks to Address Critical Challenges

The Commission’s Executive Vice-President Stéphane Séjourné referred to the chemical industry as “the mother of all industries”. Almost all industries rely on the chemicals industry for their processes and manufacturing. These include strategic sectors such as defence and healthcare.

However, the EU chemical industry increasingly faces interlinked challenges that threaten its competitiveness and business models. These include competition from third countries, declining production, and high energy costs, among others. 

How does the EU seek to address these challenges? What has been achieved so far, and what is next?  

The Commission recently presented its Action Plan outlining its priority actions to protect and improve the competitiveness of its chemicals industry, while addressing elements such as sustainability and safety. 

The initiatives outlined in the Action Plan will be key to the industry's future. Therefore, it will be critical to stay up to date on these developments. 

Strengthening Resilience

The EU is facing a challenge to maintain chemical production capacity. Over the last few years, the EU’s capacity to produce has fallen significantly, threatening jobs and its competitiveness. This is particularly true for certain key chemicals and sectors, such as petrochemicals.

To address this challenge, the Commission launched a Critical Chemicals Alliance to identify and map critical chemicals. This Alliance would also help the Commission and Member States in orienting investment priorities and advising on the coordination of EU support mechanisms. 

The Commission also intends to support Member States and regions in identifying Critical

Chemical Sites, which are essential local industrial ecosystems. These Sites would also be supported through various funding instruments such as cohesion policy, which will be modernised in the new Multiannual Financial Framework. 

Furthermore, the EU would also seek to open new markets through free trade agreements and reduce trade barriers to facilitate trade in chemicals and improve EU industry access to key molecules and critical raw materials. This would be accompanied by trade defence instruments, including anti-dumping, anti-subsidy or safeguard measures, and customs and market surveillance to protect the EU industry. 

Tackling High Energy Costs and Supporting Decarbonisation

High energy costs are a significant issue for the EU chemicals industry, as they reduce the sector's competitiveness. 

The Commission presented the Action Plan for Affordable Energy earlier this year. This Action defines steps to lower energy costs for energy consumers in the EU and strengthen the Energy Union. 

Alongside this Action Plan, the Clean Industrial Deal State Aid Framework, presented in September, also aims to clarify how Member States can support the transition to a net-zero economy. 

In this area, the Commission is also expected to update EU Emission Trading System (ETS) State aid guidelines to include additional chemical sectors to the list of energy-intensive sectors that can be compensated by Member States because of increased energy prices. 

Other pieces of legislation, such as the Net Zero Industry Act and revisions to the Industrial Emissions Directive, sought to streamline permit-granting procedures for industrial sites. Accelerating permit-granting would allow the chemical industry to modernise existing infrastructure and establish new sites.  

To further simplify the permit-granting procedure for industrial sites, the Commission introduced  the Defence Readiness package earlier this year. This package would support the building up of the industrial capacity to respond to defence and security needs. 

Later this year, an Industrial Decarbonisation Accelerator Act will be presented. With this initiative, the Commission will target permitting issues regarding the decarbonisation of energy-intensive industries. 

Furthermore, an European Grids Package is expected to be published later this year. This initiative would include several actions to improve access to grids and storage. 

Fostering Innovation 

Next year, the One Substance, One Assessment package will be rolled out. This includes the Common Data Platform for Chemicals, which will gather all data and information on chemicals and ensure that they are easily findable, accessible, interoperable and reusable.

Furthermore, the Commission is also expected to present several initiatives to support the chemicals industry’s innovation efforts. 

The Commission will present a revision of the European framework for Safe and Sustainable-by-Design chemicals and materials. This framework aims to further promote research and innovation into safer, more sustainable chemicals. 

The issue of animal testing will also be addressed through a specific Roadmap for the phase-out of these practices. This would contribute to a transition towards an animal-free regulatory system for chemicals by setting specific milestones and actions. 

In addition, the Commission intends to establish EU Chemicals Innovation Hubs and EU Network of Substitution Centres, as well as use funding from the Horizon Europe programmes 2025-2027 to promote research and innovation in the sector.

Simplifying EU Rules

To simplify EU legislation, the Commission recently put forward several legislative proposals, known as the “Omnibus” packages. The recently presented sixth Omnibus package proposal aims explicitly to simplify EU labeling requirements for chemical products, cosmetics, and fertilisers. 

Among the proposed changes, the Commission wants to “stop the clock” and delay the application of certain provisions of the recent revision of the EU’s rules on the classification, labelling and packaging of chemical substances and mixtures. Both the European Parliament and Council agreed with the Commission on this postponement. 

Later this year, the Commission plans to introduce an Environmental Omnibus package to reduce administrative burdens in environmental legislation, covering rules on the circular economy, industrial emissions and waste management. This would also be highly relevant for the EU chemicals industry as this initiative would also simplify and reduce reporting requirements and streamline permit-granting procedures. 

Another Omnibus package on food and feed safety, also due to be presented this year, would reduce and clarify obligations for plant protection products, biocidal products, feed additives, food hygiene, and official controls.  

The Commission also proposed a Founding Regulation for the European Chemicals Agency (ECHA), which would clarify and strengthen the Agency's governance and improve its financial sustainability. 

What’s Next: REACH Revision and PFAS Restriction  

Alongside Omnibus packages, the REACH revision and the proposed restriction of PFAS in consumer goods are two key files that will have a high impact on the chemical industry’s future. 

The revision of the REACH Regulation, due to be presented by the end of 2025, is expected to be part of the Commission’s simplification efforts. 

Under this revision, the Commission is considering changes to rules on chemical registration and information requirements, as well as to approaches to risk management and to the assessment of the most appropriate regulatory actions. 

The most significant planned changes would include potentially introducing notification requirements for polymers, introducing a Mixture Allocation Factor to address combined exposure, and expanding the generic approach to risk management. 

However, a delay is envisaged, as the Commission has recently faced internal hurdles with the draft impact assessment of the proposal.

Another element of the Commission’s simplification drive includes clarifying the phase-out of PFAS with a restriction under the REACH Regulation. ECHA is currently working on its scientific opinion on this matter, a process expected to continue until the end of 2026.

Based on the Agency’s opinion, the Commission will present a measure under REACH with restriction of PFAS in consumer products, with possible exemptions for certain critical industrial applications and uses such as semiconductors and medical devices. 

How You Can Stay Informed on EU Chemical Policy 

The Chemicals Industry Action Plan offered insights into the Commission’s priorities and initiatives to boost the competitiveness of the industry while addressing sustainability and safety issues.  

The end of 2025 and 2026 will be a key period for the EU’s chemical policy as policymakers work on key files such as the Omnibus packages, the REACH revision and the PFAS restrictions, among others. 

FiscalNote’s EU policy intelligence platform, EU Issue Tracker (EUIT), offers a comprehensive database of all key EU dossiers on chemicals, from the earliest signs of potential regulatory action to hotly debated and adopted measures. 

Our comprehensive platform combines cutting-edge technology with analysis from our expert team in Brussels, who summarize each dossier, explain the latest developments, highlight how proposals amend existing regulations, and provide analysis on committees, stakeholders, and future timelines.