Building Blocks | EU Petrochemicals: Foundations and Pressures
The European Union’s (EU) chemical industry is one of the largest industrial sectors in the bloc, providing the essential building blocks for virtually every downstream sector, from fertilisers for food products, automotive, and construction to packaging and clean energy technologies. It also employs over 1 million people across roughly 31,000 companies, 97% of which are small and medium-sized enterprises embedded in local economies.
However, the sector is facing acute structural pressure. A historic lack of capital investment in asset modernisation and fierce global competition, combined with comparatively high energy and feedstock costs, have eroded Europe’s global market share. It is also a major source of industrial emissions while simultaneously being one of the hardest sectors to decarbonise. Despite chemicals’ strategic economic importance, the sector has received comparatively little rigorous, policy-focused analysis. At the heart of that industry sit primary petrochemicals-also referred to as “basic chemicals” – the invisible raw materials that make end products across a multitude of strategic sectors possible: packaging, construction, automotive manufacturing, textiles, healthcare, electronics, and agriculture. The EU has one of the most mature chemicals production fleets in the world, yet now accounts for less than 10% of global primary petrochemical production capacity, its share of global chemical sales has fallen over the past 15 years, and chemicals capacity utilisation has remained below the long-term average since mid-2022.
This report aims to close the gap and inform more pragmatic advocacy and regulatory engagement on decarbonising the chemicals sector across the EU and beyond. It provides a foundational primer on the EU petrochemical industry: its key molecules, production landscape, site-level infrastructure, feedstock dependencies, as well as the leading countries and companies that underpin the European petrochemical sector. It offers the baseline needed to shape effective EU policy at a pivotal moment for the sector’s decarbonisation and what needs to be considered to stem the tide of closures in the European chemical sector.
