EU Chemical Sector Crisis

Another sign of the erosion of the European industrial base - this time in the chemical industry. Is innovation the right answer?

The FT reported today on the sorry state of Europe's chemicals sector, citing an 80% fall in investment in 2025 and the doubling of plant closures during the same year. The culprits are all too familiar and can be applied to almost any European industry:

- high energy prices

- “suffocating” bureaucracy

- cheap Chinese imports

The chemical industry underpins almost all other industries, including the one dear to my heart - lithium-ion batteries. Problems with chemicals will send shockwaves across other industries. The FT article is strong on the causes of the investment crises, but thin on the solutions. You can’t wish away all of the three problems, and there is not much you can do about them in the short term.

But you can find workarounds.

Innovation could be one such workaround. Necessity is the mother of all inventions after all. While chemical process innovation can take years, many advancements have already been made in the labs, and are itching to reach industrial scale. I am seeing this firsthand, working with startups that can:

- circumvent high energy prices by using several times less energy

- dodge bureaucracy and regulations, by CO2 utilisation and new, less toxic processes

- compete with Chinese suppliers head-on on price, or use CBAM as a moat.

The beauty of it is that time-to-market is measured in a few years rather than decades.

What is your opinion? Can Europe innovate itself out of this crisis, or are we too entangled in bureaucracy?