Ratcliffe: Chemical Industry in Europe at a Tipping Point
Sir Jim Ratcliffe, founder and CEO of Ineos, has called on European politicians to intervene at the last minute to save the chemical industry.
"I am calling on Europe’s politicians to make an eleventh-hour intervention to save the European chemical industry," said Ineos CEO Sir Jim Ratcliffe in an interview published by Ineos. There is an urgent need to bring energy and CO2 taxes on the continent in line with the rest of the world and to question unilateral tariffs. "If this isn’t done, there won’t be a chemical industry left to save," said Sir Ratcliffe.
The chemical industry is Europe's fourth-largest sector and forms the backbone of its economy. However, according to Sir Ratcliffe, the chemical industry in Europe is at a tipping point. Chemical production has already fallen by 30% in the UK, 18% in Germany and 12% in France.
The closure of 21 large European chemical plants with a capacity of more than 15 million tons is already planned. Ineos has already closed plants in Grangemouth (UK) and Geel (Belgium). The company is closing its plant in Gladbeck (Germany) and has announced plans to close two production facilities in Rheinberg in the Ruhr region. In addition, the chemical group has already mothballed plants in Tavaux (France) and Martorell (Spain).
Furthermore, eight out of ten European chemical companies are currently not investing on the continent, Sir Ratcliffe added. According to an Oxford Economics report commissioned by Ineos, almost half of Europe's ethylene capacity will be shut down by 2030.
The Ineos founder said that the moment of truth had arrived for the European chemical industry. Only urgent measures could save it. If the measures are not taken or are ineffective, the consequences for Europe could be devastating. The chemical industry is currently the continent's fourth largest industry, worth €700 billion and employing 5 million people across the supply chain, and all of this is potentially at risk, according to Sir Ratcliffe.
And it's not just jobs and investment that would be lost, the Ineos boss added. Europe's overall security would be at risk as the continent would become dependent on imports for strategically important goods in the areas of water treatment, transportation, health, medicine and even defense.
The chemical industry is also strategically vital as virtually every manufactured product, from medicines and cars to housing and technology, depends on it. Europe cannot afford to abandon this industry and risk becoming dependent on imports.
Europe's net-zero targets would also be affected by a collapse of the chemical industry. Oxford Economics predicts that CO2 emissions would rise if European chemical production were replaced by imports from China and the US, and that the longer transportation routes would lead to a further increase in greenhouse gas emissions.
Surprisingly, the European chemical industry is being squeezed out of global markets because of its self-imposed costs, the Ineos boss said. Gas prices in Europe are four times higher than in the US, and combined with high CO2 taxes on the continent and US tariffs, the industry cannot keep up.
In other parts of the world, the situation is very different. All ten major US chemical companies are expanding. China is increasing its chemical production by 9 % per year, and the Middle East is also rapidly expanding its capacities.
Sir Ratcliffe has a clear idea of what European 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."
