London, October 22, 2025, (Oilandgaspress) ––An alliance of leading European industrial companies, including INEOS, have sent a joint letter to the EU institutions and the German Federal Government warning that current rules of the EU, including the Emissions Trading System (ETS) and Carbon Border Adjustment Mechanism (CBAM) are risking further relocation of energy-intensive production to countries outside the EU – with negative consequences for employment, value creation, and climate protection.
The letter states that European industry is committed to ambitious climate protection. Already today, industry is investing significantly in climate-friendly technologies and processes. But transformation must not lead to deindustrialisation – it must be designed to be economically viable and technologically realistic.
The letter calls for immediate reforms to address this, including:
• Extending free allocations beyond the current phase-out dates
• Suspending the phase-out of free allocation through the CBAM (for the time being), and refrain for including additional sectors
• Avoiding ETS benchmark adjustments
• Stabilising/expanding electricity price compensation
The letter follows a new Oxford Economics report, commissioned by INEOS, on the decline of Europe’s chemicals base. The report found that:
• Between 2019 and 2025 Q2, the European chemical sector’s output declined significantly. It has contracted by 30% in the UK, 18% in Germany, 12% in France, and 7% in Belgium.
• Chinese imports to the EU increased by 34% between 2019 and 2024, due to China’s rapid capacity build-out (around 9% a year in investment and output) and inventories 51% above 2019, meaning China is pushing surplus product into Europe.
• European companies are suffering from tariff uncertainties and a lack of tariff protection: From August 2025, EU exports to the US face 15% (up from 6.5%), while US exports to the EU face 0% (down from 6.5%).
• EU producers are losing cost competitiveness, due to energy costs. In Q3 2025 EU gas was four times the US price.
Earlier this month, INEOS Chairman & CEO Jim Ratcliffe used these findings to warn that we are entering the 11th hour for Europe’s chemical industry.
Please see attached for the full letter and for a summary of the Oxford Economics report.
Submitted By: Alice Hyne, senior account executive, Firstlight Group
