Sir Jim Ratcliffe, founder and chairman of INEOS, has called on Europe’s politicians to make an eleventh-hour intervention to save the chemical industry.
In a powerful new interview, Sir Jim says the moment of reckoning has finally arrived for Europe’s chemical industry. It is at a tipping point and only urgent action can save it.
Working with Oxford Economics, Sir Jim believes that around half of Europe’s ethylene production capacity will close before 2030. Twenty-one major European chemical sites are already shutting, representing over 11 million tonnes capacity, with more to follow.
Across Europe, chemical output is plunging. UK chemical production is down 30%, German production is down 18% and French production is down 12%.
Eight of the world’s ten largest chemical companies are scaling back or withdrawing from Europe, while – in contrast - all of the USA’s top ten producers are investing and expanding.
The consequences for Europe could be devastating. Chemicals is currently the continent’s fourth most valuable business, worth 700 billion euros and employing 5 million people across the supply chain and it is all potentially threatened.
And it’s more than just jobs and investment that will disappear. Europe’s entire security would be at risk as the continent becomes dependent on imports for strategic essentials for water treatment, transport, health, medicines and even defence.
Chemicals are Europe’s fourth largest industry and form the backbone of its economy. They are also strategically vital, as virtually every manufactured product, from medicines and cars to housing and technology depends on them. Europe cannot afford to surrender this industry and risk becoming reliant on imports.
Europe’s net zero ambitions will also be damaged if its chemical industry collapses. Oxford Economics believes that if European chemicals production is replaced by imports from China and the US, carbon emission will rise and the greater distances needed to travel will further increase greenhouse gas emissions.
Astonishingly, Europe’s chemical industry is being driven out of its global markets because of its own self-imposed costs. Europe’s gas prices are four times higher than the US and, together with the continent’s high carbon taxes and U.S. tariffs, the industry cannot compete.
It’s a very different picture in the rest of the world. All 10 of the major US chemical companies are expanding. China is growing its chemicals output at 9% a year and the Middle East is rapidly increasing capacity.
Sir Jim has a clear view as to what Europe’s politicians need to do. “We’re at the eleventh hour and there are three things that need to happen urgently. First, remove the green taxes and levies from energy costs. Second, scrap the carbon taxes. And third, give us some tariff protection. We need actions, not sympathetic words or there won’t be much of a European chemical industry left to save.”
