How to Defossilise the Chemical Industry: RCI Proposes Policy Blueprint for a Renewable Carbon Future

A fresh report lays out a roadmap for the EU to shift from fossil carbon to renewable carbon through biomass, CO₂, and recycling.

The chemical industry in Europe, a cornerstone of manufacturing and innovation, is currently grappling with significant challenges. Once at the forefront of global production and patents, this sector is now feeling the pressure from soaring energy costs, fierce international competition, and tightening regulations. Today, it finds itself trailing behind China and the US in several crucial areas. One of its biggest weaknesses is its heavy reliance on fossil carbon feedstocks, which still account for over 90% of its raw materials.

As the EU aims for long-term prosperity and climate neutrality, the chemical industry's dependence on fossil fuels is not only contributing to deindustrialisation but also hindering progress towards sustainable innovation.

Turning Crisis into Opportunity: A Renewable Carbon Transition

In the midst of these structural challenges lies a golden opportunity: to defossilise Europe’s chemical industry by embracing renewable carbon sources like biomass, carbon capture and utilisation (CCU), and chemical recycling.

Shifting to renewable carbon is not just an environmental necessity; it’s also a smart move to boost Europe’s industrial competitiveness, economic resilience, and climate leadership. However, there are still significant hurdles to overcome, including:

• A slow rollout of renewable energy infrastructure
• Insufficient market demand for sustainable products
• Fragmented regulations
• Limited adoption of emerging technologies

The Renewable Carbon Initiative (RCI) has put together a fresh report that lays out ten specific policy recommendations to tackle the challenges we face. This report was crafted in partnership with experts from nova-Institut and various RCI member organizations, all with the goal of speeding up the large-scale adoption of renewable carbon solutions.

A Strategic Vision for Industrial Defossilisation

At the heart of RCI’s proposals is a bold vision: a commitment across the EU to defossilisation, supported by practical regulations, targeted incentives, and clear market signals. Key elements of this strategy include:

• Setting mandatory renewable carbon content targets for chemicals and materials
• Introducing new legislation or updating existing frameworks (like PPWR, ELVR, ESPR)
• Modifying the EU Emissions Trading System (ETS) or creating a new Carbon Utilisation Trading System (CUTS)

These policies need to ensure that we have secure and sustainable access to feedstocks while keeping our competitive edge:

• Make it easier to access more waste-based feedstocks
• Secure local biomass from agriculture, forestry, and carbon capture and utilization (CCU)
• Encourage international trade in renewable carbon
• Adjust regulations to find a balance between energy and material uses
• Speed up the deployment of affordable renewable energy

Bridging the Implementation Gap

RCI emphasizes that defossilisation goes beyond just climate objectives – it’s crucial for protecting Europe’s industrial foundation. If we don’t take decisive policy action, we risk stalling innovation before it can reach a commercial level.

The EU Competitiveness Compass highlights this necessity:

“To transition the economy towards clean production and circularity, the EU must create lead markets and policies that incentivize early adopters.”

RCI’s recommendations align with this goal by eliminating structural barriers, offering regulatory clarity, and encouraging private investment in green chemistry.

About the Report

This report was commissioned by the Renewable Carbon Initiative (RCI) and crafted by experts at nova-Institut in close collaboration with RCI members. You can download the full publication here:

???? RCI Policy Proposals for Facilitating the Transition to Renewable Carbon (PDF)