Impact of EU Regulations on Petrochemical Competitiveness

This technical report discusses the challenges faced by the European petrochemical industry due to EU environmental legislation, particularly focusing on the EU Emissions Trading System (EU ETS) and its financial implications for companies like Shell. The report outlines how compliance with the EU ETS is significantly increasing operational costs and complicating the business case for decarbonization projects. It details the pressures from rising carbon costs, the removal of free emission allowances, and the limited relief provided by the Carbon Border Adjustment Mechanism (CBAM). Additionally, the report highlights the burdens imposed by the Registration, Evaluation, Authorisation and Restriction of Chemicals (REACH) regulation and the need for simplification to enhance competitiveness. The document emphasizes the urgency for the EU to implement effective measures to support the petrochemical sector, including energy cost relief and regulatory simplification, to prevent further erosion of competitiveness and ensure the long-term viability of the industry in Europe.