Perspectives of the European Chemical Industry EESC EPC

Perspectives of the European Chemical Industry EESC / EPC Conference, 12 November 2014, Brussels René van Sloten Executive Director Industrial Policy Cefic

The European chemical industry in 2013. . . Sales 2013: € 527 billion Ø Contributes to 17% of the world’s chemical sales (2013) Ø Represents 29, 000 companies (96% SMEs) Ø Employs 1. 2 million people (2013) Ø Generates € 527 billion of revenues (2013) Ø Creates a trade surplus of € 48. 7 billion (2013) Source: Eurostat and Cefic Chemdata International 2014

Has the EU chemical sector gained or lost competitiveness over the last 10 years? Production platform Europe: global production share and trade balance evolution (2003 -2013) Source: Cefic Chemdata International 2014

One quarter of EU chemicals production is sold outside the EU EU chemicals production in value (€ 527 billion, 2013) = 74% EU home market (€ 388 bn) 26% + EU export market € 139 bn Source: Cefic Chemdata International 2014

Chemicals made in Europe are losing share in the domestic EU market Source: Cefic Chemdata International 2014

Chemicals made in Europe are losing share in the Rest-of-World market Source: Cefic Chemdata International 2014

Advantaged energy and feedstock prices are a clear enabler of competitiveness This is boosting profits abroad and attracting billions of dollars in investment

Can we remain competitive? J J Large integrated domestic market with strong customer industry clusters High international orientation and global networks to external customer industries J Skilled and motivated workers and scientists J Constant adaptation to globalised markets J Strong innovation efforts will generate new growth clusters: Efficient Energy use, health and new materials which could solve upcoming societal mega challenges High energy and feedstock costs High Regulatory Compliance Costs (e. g. REACH, IED, …. Lack of a “Common Industrial Policy” or a “Common Energy Policy” Non-energy raw material availability and cost issues (eg. biobased feedstock, rare earths, minerals) Mature market, ageing population, risk aversion of societies

Sustainability challenges are business opportunities Health & Nutrition Energy & Resources Source: BASF 9 billion people will live on Earth by 2050! How can we guarantee food and water supply for everyone? § What are possible impacts from plant science? § 50% more primary energy needed by 2030! § What is the ideal energy mix for the future? § How big is the share of renewable energy? Construction & Housing Mobility & Communication 67% of the world population will live in cities by 2025! § What does future architecture look like? § Which materials are needed to make energy consumption more efficient? 1. 2 billion cars will drive on Earth by 2020! § How can we reduce greenhouse gas emissions and fuel consumption? § What will future cars be made of?

European Innovation Partnerships • • New technologies for more efficient extraction Efficient use and recycling in the chemical industry • New concepts and materials for energy generation, storage and efficiency in sustainable construction and urban mobility New materials for smart living • • Lead development of integrated water strategies for the chemical sector to: - reduce use of fresh water - improve waste water management

CO 2 - a renewable raw material • Use as feedstock the only carbon resource we have in abundance in Europe • Do what plants do…better Energy carriers Fuels Fine chemicals CO 2 Basic chemicals Light olefins Polymers 2020 2030 2040

Societal acceptance of new technologies Green biotechnology Nanotechnology Renewable energy Unconventional fossil energy

How can European Industrial Policy help? Ø Main Goal: 20% Industry participation in European GDP Ø Mainstreaming Industrial Competitiveness Ø Resources for Innovation o Horizon 2020 Funds for Priority Action Lines (Key Enabling Technologies, Bio-based Products, Advanced Manufacturing) o Facilitate Integration of Manufacturing and Services o Structural and Investment Funds available for Regions, guided by Smart Specialisation Ø Better Reguation o Cumulative cost assessment/ Regulatory fitness check for the chemical industry

How can European Industrial Policy help? Ø Access to Raw Materials o Acknowledges chemical industry’s need to access bioethanol and other bio-based building blocks at global market prices Ø Maximise potential of EU's internal market o Call for further development of infrastructure for gas, electricity and chemical building blocks Ø Facilitate access to external markets: o Stresses the need to facilitate the integration of EU firms in global value chains Ø Access to Finance

“ The best of chemistry is yet to come “ Let’s make sure it happens in Europe!