Insights Chemicals

01/10/25

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4 min read

Update on the EU’s Chemicals Package

Jenny Kelehan

Associate

+353 86 1765 000 jkelehan@mhc.ie

The European Commission has announced plans to overhaul the EU chemicals industry. The aim is to simplify the law and make the industry more competitive. Key goals include reducing costs, increasing demand and promoting investment. Our Planning & Environment team considers what the proposed changes might involve.

What you need to know

The European Commission has announced plans to make the EU chemicals industry more competitive by:

Establishing a Critical Chemical Alliance to ensure fair competition
Implementing an Affordable Energy Action Plan to reduce costs
Highlighting economic incentives to boost demand for clean chemicals
Restricting per- and polyfluoroalkyl substances (PFAS) while ensuring their continued use in critical applications
Proposing the “6^th Omnibus Package” to simplify EU chemicals legislation and enhance the governance of the European Chemicals Agency

The chemicals industry is the fourth largest manufacturing sector in the EU. Despite its size, it is experiencing significant challenges. These challenges include high energy costs, unfair global competition, and weak demand.[1] The European Commission announced an Action Plan for the chemicals industry in July 2025. The plan sets out concrete measures, designed to strengthen global competitiveness and modernise the sector. The move is part of a wider simplification package known as the 6^th Omnibus, which aims to simplify EU laws and cut administrative burdens.

The Action Plan is divided into five key areas:

1. Strengthening resilience

The Action Plan introduces measures to maintain critical production in the EU, open new markets and protect EU industry. A key measure is the establishment of a Critical Chemicals Alliance (CCA). The CCA will comprise Member States and chemical industry stakeholders. Its goal will be to address the risks of capacity closures and tackle trade issues, eg, supply chain dependencies and distortions. To do this, the CCA will first identify critical production sites that require policy support. The CCA will align investment priorities to support these critical production sites. It is intended that this will encourage innovation and achieve regional growth.

To supplement the CCA’s work, the Commission will apply trade defence measures. The Import Surveillance Task Force will expand chemical import monitoring. Its purpose is to help safeguard fair competition for EU operators.

2. Securing affordable energy supply and supporting decarbonisation

The Commission adopted an Affordable Energy Action Plan (AEAP) in February 2025. Under the chemicals package, the Commission will swiftly implement the AEAP to help reduce the high costs of energy and feedstock. The AEAP will introduce clear rules for low-carbon hydrogen. It will also update state aid measures to lower electricity costs for more chemical producers. The AEAP encourages using clean carbon sources alongside support for renewables. The Commission also announced measures and financial incentives to support the clean transition of the EU chemical industry.

3. Economic incentives

The Action Plan highlights existing and upcoming fiscal incentives and tax measures to boost demand for clean chemicals. The Commission will also assign funding under Horizon Europe 2025–2027 to accelerate the development of safer, more sustainable chemical substitutes.

4. PFAS

Prior commitments to minimise PFAS emissions remain in place under the Commission’s plan. However, the use of PFAS, also known as “forever chemicals”, will be permitted to continue in critical applications, eg medicinal products. Their use will be subject to strict conditions and only where no alternatives are available. The European Chemicals Agency will play a pivotal role in the regulation of PFAS. The Commission will also invest in innovation, promote remediation based on the “polluter pays principle”, and prioritise the development of safer alternatives.

5. Regulatory simplification and streamlining

The European Commission has adopted the 6^th Omnibus Package to reduce compliance costs and administrative burden for the chemical industry. The package includes measures to:

Simplify labelling rules for hazardous chemicals
Clarify EU cosmetics regulations
Introduce a delegated act on low-carbon hydrogen, and
Ease registration for EU fertilising products

It is anticipated these measures will save €363 million annually for the industry.

As part of the omnibus package, the Commission has proposed new rules to strengthen and modernise the governance of the European Chemicals Agency (ECHA). The ECHA’s mandate has continued to evolve since its inception to include responsibilities under multiple EU regulations. The proposed ECHA Basic Regulation aims to equip the ECHA with better resources, flexibility and structures required to carry out its growing mandate.

Conclusion

The chemicals industry contributes to over 96% of manufactured goods, making it a cornerstone of the EU’s industrial resilience and competitiveness. As the sector faces key challenges, it is hoped that the successful implementation of the EU’s Chemicals Action Plan will revitalise the industry and ensure its transition to a clean and circular economy model. A number of legislative changes are expected to affect the EU chemicals industry in the coming months, particularly concerning PFAS. For example, the Commission has indicated that it will adopt a proposal for a targeted revision of the REACH Regulation by the end of 2025. New rules regulating the use of PFAS in food packaging are also expected next year.

For advice on how the EU’s chemicals package affects your organisation, contact a member of our Planning & Environment team.