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High Energy Costs = Steep Decline In EU Chemical Industry’s Global Competitiveness

Business Standard

High energy costs and lower R&D spending intensity over the past two decades have dented the EU chemical sector’s competitiveness in the global export market, according to a study by Cefic, the European chemicals trade body.  The report concludes that lost competitiveness has eaten into the EU share of global exports, which fell to 21 percent in 2012 from 31 percent in 1991.

The study shows that the EU industry’s diminished share in world sales is mostly due to a decline in competitiveness as opposed to slow growing destination markets. Even the EU industry’s domestic sales market share has dropped.

Energy costs are the European industry’s Achilles’ heel, especially compared to the oil and gas-rich Middle East, and more recently to the US, which are riding on a shale gas boom. The European chemical sector is also grappling with slipping investments and increasing regulatory complexity, exacerbating the competitiveness gap with its rivals at the detriment of innovationand job creation.

According to the Oxford report, the downward trend can be halted or even reversed most significantly by reducing energy costs.

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