The European Commission (EC) released on July 7, 2025, a Chemicals Industry Action Plan (Action Plan) to strengthen the competitiveness and modernization of the European Union’s (EU) chemical sector. According to the EC, the Action Plan addresses key challenges, “namely high energy costs, unfair global competition, and weak demand, while promoting investment in innovation and sustainability.” The EC also released a simplification omnibus on chemicals to streamline and simplify further key EU chemicals legislation, as well as a proposed regulation to strengthen the governance and financial sustainability of the European Chemicals Agency (ECHA).

Action Plan

The EC states that the Action Plan proposes the following measures:

• Resilience and level playing field: The EC will work with EU member states and stakeholders to establish a Critical Chemical Alliance to address the risks of capacity closures in the sector. According to the EC, the Alliance will identify critical production sites needing policy support and tackle trade issues such as supply chain dependencies and distortions. The EC will also “swiftly apply trade defence measures to ensure fair competition, while expanding chemical import monitoring through the existing Import Surveillance Task Force.” The Alliance will align investment priorities, coordinate EU and national projects, including Important Projects of Common European Interest (IPCEI), and support EU critical production sites to boost innovation and regional growth.
• Affordable energy and decarbonization: The EC will implement “at full speed” the Affordable Energy Action Plan to help reduce high energy and feedstock costs. According to the EC, the Affordable Energy Action Plan has introduced clear rules for low-carbon hydrogen and will update state aid to lower electricity costs for more chemical producers by the end of 2025. The Affordable Energy Action Plan also encourages using clean carbon sources like carbon capture, biomass, and waste, alongside support for renewables. As reported in our July 31, 2025, blog item, the EC has begun a public consultation on improving chemical recycling.
• Lead markets and innovation: The Action Plan highlights fiscal incentives and tax measures to boost demand for clean chemicals. According to the EC, the upcoming Industry Decarbonisation Accelerator Act will set EU content and sustainability rules to support market growth and clean technology investment. The EC notes that the upcoming Bioeconomy Strategy and Circular Economy Act will boost the EU’s resource efficiency and chemicals recycling, and strengthen the market for biobased and recycled alternatives to fossil-based inputs. The EC states that it will also launch EU Innovation and Substitution Hubs and mobilize EU funding under Horizon Europe (2025–2027) to accelerate the development of safer, more sustainable chemical substitutes.
• Taking action on per- and polyfluoroalkyl substances (PFAS): The Action Plan reaffirms the EC’s commitment to minimize PFAS emissions “through a robust, science-based restriction, while ensuring continued use in critical applications under strict conditions where no alternatives are available which will be proposed swiftly after ECHA’s opinion.” The EC states that it “will also invest in innovation, promote remediation based on the polluter pays principle, and prioritise the development of safer alternatives.”

Simplification Omnibus

As part of its ongoing efforts to boost the EU’s competitiveness, the EC states that it adopted “a sixth simplification omnibus to reduce compliance costs and administrative burden for the chemical industry while ensuring strong protection of human health and the environment.” This includes simplifying hazardous chemical labeling rules, clarifying EU cosmetics regulations, and easing registration for EU fertilizing products by aligning information requirements with standard Registration, Evaluation, Authorisation and Restriction of Chemicals (REACH) rules for chemicals. According to the EC, it expects these measures “to save at least €363 million annually for the industry.” The EC’s fact sheet states that the omnibus will simplify the following areas:

• Classification, labeling, and packaging of products:

   

  • Simplify formatting rules for hazardous chemicals;

     

  • Lighten obligations for advertisements;

     

  • Exclude professional transactions from the specific obligations on advertisements and distance sales;

     

  • Clarify labeling of fueling stations; and

     

  • Simplify labeling rules;

     

• Cosmetics:

   

  • Define procedural timelines and transitional periods for the cosmetics industry;

     

  • Provide guidance on use of natural complex substances in cosmetics; and

     

  • Abolish redundant notification and reporting obligations for businesses and EU member states; and

     

• Fertilizers:

   

  • Streamline information requirements by applying the standard REACH registration requirements;

     

  • Pave the way for more efficient assessments of microorganisms for use in plant biostimulants; and

     

  • Advance digitalization of documentation and reporting requirements.

The EC states that the proposal for the ECHA Basic Regulation would equip ECHA with the resources, flexibility, and structural adaptations required to fulfil the duties under its growing mandate, which now includes responsibilities under multiple EU regulations, namely spanning classification and labeling, biocidal products, import and export of hazardous chemicals, waste management, and water.

Commentary

With the release of the Action Plan, simplification omnibus, and ECHA Basic Regulation, the EC is taking steps to address regulatory and funding issues affecting the chemical industry. Stakeholders have been waiting for REACH revisions since the EC published its Chemicals Strategy for Sustainability, a key building block of the European Green Deal, in 2020. According to the EC’s questions and answers (Q&A), the simplification omnibus “stems from a review of chemicals legislation with stakeholders, targeting red tape and inefficiencies to cut costs, ease market access, support innovation, and strengthen competitiveness.” The EC intends to support the production of affordable essential chemicals such as steam crackers, ammonia, chlorine, and methanol, through the Critical Chemicals Alliance. The EC states that it will also identify critical chemicals at risk from trade issues to guide policy and improve monitoring. Stakeholders should be prepared to engage with the EC regarding these issues.