INEOS Warns Europe: Act Now or Lose Decarbonization Edge
INEOS has issued a stark warning to Europe, stating that without trade protection, the continent risks offshoring CO2 emissions and losing competitiveness in decarbonising industries. This comes as the company recently upgraded its Hull site to convert operations from natural gas to clean hydrogen, reducing emissions by around 75%. Meanwhile, the European Commission has pledged support for domestic production of strategic chemicals and modernisation, but many warn these measures may come too late.
INEOS' concerns are echoed by the current state of the European petrochemical industry. The industry is facing a crisis, with plant closures and losses contributing to its unravelling. This downturn is exacerbated by high energy costs and 'carbon-heavy dumping' from countries like China, which has seen INEOS cut 60 jobs at its Hull acetyls plant. The situation is so dire that up to 40% of the EU's ethylene capacity, totalling 24.5 million tonnes, is at high or medium risk of closure.
The root of the problem lies in the global expansion of ethylene production. Countries such as China, the USA, and Saudi Arabia have made significant investments in ethylene plants, aiming to increase capacity and meet growing demand for chemical intermediates and end-products. China, in particular, has seen around 70% of new global ethylene capacity built there between 2020 and 2025. These developments put pressure on European competitors, who face cheaper production costs elsewhere. The industry is cyclical, but larger plant sizes and new integrated chemicals refineries could extend the current downturn until the early 2030s.
The European Commission's pledge to support domestic production and modernisation is a step in the right direction, but more action is needed to protect the continent's competitiveness in decarbonising industries. Without government intervention, more factories, skills, and jobs could be lost. INEOS' CEO, David Brooks, warns that the situation is urgent, and decisive action is required to safeguard the future of Europe's petrochemical industry.
