The EU’s Chemical Industry Action Plan undermines investment

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BrusselsReport.eu
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By Tom Parker – Chair of the British Chamber of Commerce EU and Belgium’s Policy Council.

Last week, the European Commission published its “European Chemical Industry Action Plan” (CIP). The plan deserves praise for its ambitious goals, and its timing is noteworthy given recent closures and redundancies. However, while aiming to enhance the competitiveness of European industry in global markets, there is a stark inconsistency between the plan’s broad objectives and its underlying detail which risks undermining the competitiveness of and investment in Europe, both within the chemical industry and across the broader value chain.

The CIP targets four key areas:

  1. Strengthening resilience and competitiveness through a Critical Chemical Alliance to prevent capacity closures and ensure fair competition with trade defence measures.
  2. Lowering energy and feedstock costs by implementing an Affordable Energy Action Plan.
  3. Fostering lead markets and innovation by offering fiscal incentives and tax measures to drive demand for clean chemicals.
  4. Tackling per- and polyfluoroalkyl substances (PFAS) by reducing emissions while allowing their continued use in critical applications.

It is on point four where the plan largely falls short by creating ongoing uncertainty and introducing unpredictability, both factors that undermine long term investment as pointed out by the World Bank.

The provision for derogations for critical applications under strict conditions is a step forward from the original EU PFAS restriction proposal. However, the absence of clarity on derogation criteria and process, definitions e.g. consumer uses, and the reference to the legally unfounded essential use concept all contribute to ongoing uncertainty. More fundamentally, the failure to reflect the important differences between PFAS in terms of their scientific properties, behaviours and related risk profiles introduces arbitrariness and unpredictability.

All the above indicate that the European Commission is seeking to move away from PFAS technology in Europe. However, given the role that substances like fluoropolymers play in a wide range of strategic industries and technologies, and in light of Europe’s competitiveness and economic security objectives, the CIP’s approach warrants very careful further scrutiny.

Europe already faces stranded fluoropolymer assets, and investment in their rescue or in new fluoropolymer capacity and innovation is unlikely without further clarification and a clearer commitment. This has major implications not only for fluoropolymer manufacturing but also the value chain it enables in Europe.

Within the current geopolitical context, has the Commission fully assessed the investment and broader socio-economic risks associated with this clarification proposal? While potential alternatives exist, can they match the combination of performance and cost-efficiency of fluoropolymers? Furthermore, have the sustainability profiles of these alternatives been properly assessed?

With the upcoming revision of REACH, EU policy on PFAS will impact broader policy thinking. With a view to stimulating investment in Europe and its competitiveness, careful reflection on the potential PFAS precedent is therefore essential. More specifically, further very careful consideration of the merits of an exemption for fluoropolymers under strictly controlled conditions should be prioritised.

 

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