Innovation remainsdriver European chemical industry

Innovation remains the driver of European chemical industry

5:47 AM, 21st February 2018
Innovation remains the driver of European chemical industry
A representative image of chemical Industry. (File photo)

Research and innovation remain at the heart of European chemical sector

Initiatives such as SusChem, and active adoption of low carbon technology, for the development of sustainable chemicals are attractive

Fierce global competition owing to high energy expenditure and challenging raw material costs to challenge the chemical sector

Brexit remains a future threat to European chemical sector, notably exports, and demand important reforms to prevent the plausible risks.

By Madhavi Bhosale

European chemical sector has portrayed its own success story since its development over 150 years ago. Manufacturing sector is playing a crucial role in terms of significant economic contribution and generation of vast employment. European Commission estimates that chemical manufacturing sector is Europe’s wealth-generating sector while accounting for second highest value per employee after pharmaceutical industry. The EU Chemicals industry represented about 7 percent of the total industrial production and 17 percent of the global chemical sales in 2013. The industry penetration reaches to construction, medical, pharmaceuticals, automotive, electronics, communication, energy, as well as agricultural sector.

Innovation remains at the heart of European chemical sector that consistently lead the industry and society towards sustainable and economic solutions. Development and implementation of low carbon technologies with the active collaboration among academia, industry, regulatory networks, and non-manufacturing sector, remain at the center for research and innovation in the chemical sector. After Europe’s significant economic downturn in 2009, the chemical sector has grown extensively and has become the pivotal player in the European economy. Competition from the United States and Asian countries, especially China is the future milestone to be achieved by the sector.

Priority of Safety

Chemical safety measure is the primary stage of research and development that controls selection, operation, processing, and use of raw materials. Chemistry touches almost 95 percent of manufactured goods utilized by consumers on daily basis. Chemical processes and production carry an essential aspect of potential risks to an environment as well as employees and consumers.

European chemical industry has a strong review and regulatory frameworks that consistently assess the manufacturing, production, disposal, and emission aspects of the chemical factories. European chemical sector has implemented the adoption of life cycle assessment (LCA) by companies that regulate sourcing optimization of raw materials. REACH legislation of Europe that controls the Registration, Evaluation, Authorization and Restriction of Chemicals, is ensuring delivery of premium standards of chemicals worldwide. The distribution and transportation chain of the chemical sector has collaborations at European and national level under Responsible Care which also includes non-manufacturing sectors.

In addition, VECAP (Voluntary Emission Control Action Programme) has been evolving to regulate the emissions and disposal aspects of the industry. Owing to these regulations, the safety record of the European chemical industry is considered best among other manufacturing sectors.

Research & Innovation Aiming Climate Change and Sustainable Development

Innovation remains the driver of chemical industry while creating solutions to accommodate application and consumer preferences. Europe inhabits a strong backbone of excellent R&D institute, extensive R&D expenditure and established legal framework which in turn is significantly contributing towards the development of sustainable solutions. Low carbon technology development remains at the heart of European R&D and holds ambitions of carbon-neutral chemical sector by 2050.

The European Technology Platform for Sustainable Chemistry (SusChem) is a novel technology platform that encourages collaboration among academia, industry, policymakers, and other related areas. Suschem initiative works with the vision to provide sustainable solutions in the field of chemistry and biotechnology. Greater strides to achieve European Union and global climate change objectives are under process, notably in terms of developing and implementing innovative low carbon technology which in turn can reduce GHG emissions while creating new employment opportunities.

As chemistry penetrates in almost every industry, innovations of the chemical sector can provide solutions for multiple downstream end users and consumers. On the other hand, being energy-intensive industry, European chemical industry is continuously researching for solutions to reduce energy consumption.

Country-wise Scenario

Germany is leading the chemical industry of Europe while providing significant employment and have highly skilled professionals. Innovation is the backbone of German chemical industry with the support of €14.3 billion expenditure in R&D by the federal government. A large number of chemical patent registrations, strong infrastructure in form of chemical parks, and well-connected supply infrastructure are the essential factors supporting the colossal industry growth.

The Netherlands is an important nerve centre of the European chemical industry in terms of chemical production and services. The progress can be attributed to best geographical location, excellent infrastructure, and great transport accessibility in terms of presence of seaports, roads, railways, and renowned R&D institutes performing fundamental and applied research.

The chemical industry in the United Kingdom has a predictable restraints of Brexit during the transition period. The present scenario of the sector represents significant contribution to nation’s economy as well as investment in research and development. Green technologies manufactured in the country are known to deliver two fold carbon saving.

France’s Chemical industry has formed an important economic base with large number of production plants that provide huge production chain of fine, speciality, and basic chemicals, which in turn derive major export opportunities.

Italy is also one of the leading chemical producer followed by Belgium, Spain, and Poland. According to the European Chemical Industry Council (cefic), other 19 EU countries contribute significantly in the chemical sales where Austria, Sweden, Czech Republic and Finland accounts for almost half of the contribution.

Competition and Regulatory Challenges

International competition in terms of energy expenditure and raw material cost pose important risks for European the chemical sector. For instance, ethylene production in Europe is twofold costlier as compared to the United States.

Ethylene is an essential and basic ingredient in production of coating materials, detergents, and plastics, which in turn has resulted in its increased import. Chemical sector in Europe is energy intensive representing 19 percent of total energy consumption of all industries. Regions like US and China have benefits of cheaper energy resources and raw material access and are the leaders of the global chemical industry.

Economic growth and industrialization in China has increased the demand for chemicals and in turn encouraging chemical industry growth. Shale and natural gas resources in the United States are favouring the energy demands of the various industries, making an easy path for the growth of chemical sector.

New regulations towards climate change, achievement of sustainability and need to increase resource efficiency are the major challenges of the sector. REACH is one of the regulations initiated in Europe with the aim of protection of human health and environment from chemical consumption. Several chemical industries have reported negative assessment towards REACH and have proposed predictable hindrance to innovations in the sector.

Concluding Remarks

While demonstrating a pivotal role in Europe’s economy, European chemical sector has multiple milestones to achieve in future. Upcoming Brexit transformation remains a predictive hurdle for the exports of chemical industry. International competition is an important milestone which can be reached by active engagement with global competitors and development in regulatory framework.

Author: Madhavi Bhosale is Features Writer at Future Market Insights.

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