News & Events

Policy Barriers to Net-Zero in Europe’s Chemical Industry

New RCI report outlines barriers and points to solutions

Phil Black - PII Editor 18 minutes ago

31 3 minutes read

Key points

Listen to this article

A recent report from the Renewable Carbon Initiative (RCI) sheds light on the significant hurdles that still stand in the way of achieving a net-zero chemical industry. Despite a growing political will to move away from fossil fuels in Europe, the study reveals that existing EU policies are creating major roadblocks for the adoption of renewable carbon-based chemicals and materials.

The report, titled Policy Barriers for Renewable Carbon Uptake, is grounded in a survey conducted among RCI member companies and highlights ten specific policy challenges across seven different EU legislative frameworks. These frameworks include the EU Emissions Trading System Directive (ETS), the Renewable Energy Directive (RED III), the Packaging and Packaging Waste Regulation (PPWR), and the Single-Use Plastics Directive (SUPD). Collectively, these obstacles are hindering the shift from fossil-based feedstocks to more sustainable options like bio-based materials, carbon capture and utilization (CCU), and recycled carbon sources.

Key takeaways for policy-makers

Regulatory misalignment

The report points out a significant issue with regulatory consistency, leading to what’s described as a “non-level playing field.” In many instances, bio-based products face tougher sustainability verification standards compared to their fossil-based alternatives. Additionally, subsidies for biofuels are skewing feedstock markets for material applications.

A major concern highlighted is the uncertainty surrounding investments in carbon capture and utilization (CCU), particularly because of the sunset clause that restricts the timeframe in which fossil-derived CO₂ is acknowledged. This creates investment timelines that don’t align with standard industrial financing cycles, putting crucial CCU projects in jeopardy. Such uncertainty poses a threat to the creation of climate-neutral value chains, especially in industries that are hard to decarbonize.

Outdated definitions and misleading classifications

One of the key obstacles identified is the reliance on overly narrow definitions that leave out a broad spectrum of renewable carbon products from incentives or market access. Definitions in frameworks like the ETS and PPWR exclude entire groups of innovative and environmentally friendly solutions.

A particular worry is the ETS’s restriction of CCU recognition to products that last for centuries, which overlooks the circular replacement of virgin fossil feedstocks through CCU. The importance of recycling in maintaining carbon circulation isn’t sufficiently recognized within this framework.

Additional challenges stem from misleading classifications. For instance, the SUPD’s definition of “natural polymer” excludes industrially produced, nature-identical polymers, while the PPWR annex lumps all biodegradable plastics together, regardless of their actual biodegradability or recyclability. These methods risk creating confusion throughout the value chain.

Bureaucracy versus industrial reality

The report highlights that some implementation requirements don’t quite match up with the realities of industrial production, leading to unnecessary red tape. For instance, figuring out the minimum post-consumer recyclate (PCR) content for each individual plant and product format is pretty impractical. This approach ends up wasting resources that could be better spent on boosting PCR usage and enhancing recycling rates.

Regulatory measures aimed at increasing the use of renewable feedstock in the chemical and materials sectors should be crafted to ensure they can be implemented efficiently and with a reasonable amount of effort.

Lack of a coherent support framework

Members of the RCI consistently point out that the biggest hurdle isn’t just one regulation, but rather the lack of a clear and comprehensive support framework for renewable carbon in the chemicals and derived materials sector. Specifically, the absence of well-defined targets and incentives for renewable carbon materials is viewed as a significant barrier to making progress.

Proposed solutions

The report suggests several actions, such as revising restrictive definitions in legislation like the ETS and PPWR, introducing more tailored rules for CCU feedstocks, cutting down on unnecessary administrative complexity, and better aligning sustainability requirements across different carbon sources and applications.

This background report aims to complement RCI’s Policy Proposal Study, which is set to be published in 2025.