Petrochemicals in crisis? Critical reflections on the lobby narrative

The petrochemical sector is loudly claiming to be in crisis, threatened by climate policies, high energy prices and foreign competition. But is that picture accurate? Fairfin investigated the figures behind the lobby narrative and concludes: there is no acute crisis. The sector remains structurally profitable, despite turbulent years.

3 Oct 2025

The petrochemical sector has been making its voice heard louder than ever recently. Chiefs of BASF, Evonik and Ineos are warning of a major crisis. According to them, the sector in Europe is on the verge of collapse, threatened by high energy costs, strict climate policies, and unfair competition from China. The new report from Fairfin “The high costs of Flemish petrochemistry: Critical study of a fossil industry” brings a welcome nuance: there is no question of an acute crisis. Politicians are quickly impressed by stories of disaster within the business world. Research by Daniel Kahneman and Amos Tversky shows that people (including politicians) subjectively weigh loss more heavily than profit of the same size. A sob story about an industry in distress evokes urgency and fear, and can therefore be very effective, especially if the industry threatens to leave. Policymakers quickly bought into the frame of an industry under pressure, with the Antwerp Declaration as a striking example. In it, the chemical sector, together with European policymakers, pleads for, among other things, more government support, relaxation of rules, and abundant and cheap low-carbon energy. But is this picture correct? Fairfin's research addresses this and shows that the story of the petrochemical industry is primarily a lobbying tool to obtain government support and the weakening of European environmental legislation, such as the Green Deal. In the article A Crash Course on the EU’s Deregulation Wave, lobby watchdog Corporate Europe Observatory shows how the Antwerp Declaration, along with a strong shift to the right in the European Parliament, led to a draconian wave of deregulation in Europe. The crisis narrative of the petrochemical industry The words of the CEO of BASF, who states that the industry in Europe "has its back against the wall", sound alarming. Evonik and Ineos go one step further by warning of massive job losses and a trough that the chemical sector does not seem able to escape. The Antwerp Declaration translates that frame into a political text: "the European transition can only be achieved if basic and energy-intensive industries also remain and invest in Europe." Fairfin's nuance Fairfin punctures this narrative by putting the figures alongside the statements. They analyze the accounts of petrochemical companies in Flanders, and the data on the economic and environmental performance of the chemical sector. In addition, Fairfin looks at whether this industry is indeed so essential for economic prosperity in Flanders, and how emissions and energy consumption compare to the wealth created. The report shows that, although the sector has had turbulent years, particularly due to the corona pandemic and the energy crisis, it remains structurally profitable. The so-called trough the chemical sector is in is mainly explained by the demand shock caused by corona. Companies like BASF and Ineos have still made significant profits in recent years and are financially healthy. The sector is therefore far from a collective bankruptcy. Fairfin also shows that the sector emits almost 4 times more CO2 per euro of added value compared to other ETS sectors. The sector also has a high energy intensity, consuming 62% of the final industrial energy consumption in Belgium. In addition, petrochemistry receives support in the form of energy tax discounts, compensation for increased energy costs, and untaxed use of mineral oils (i.e. fossil feedstock) in the production process. What we do see is that the total production (in weight) of petrochemistry in Europe fell by an average of 1.15% annually between 2013 and 2024. Whereas countries like China and the United States are actually growing fast. Together they are responsible for more than 50% of global plastic production. In this, the share of European production has also been declining for years. The result is that European petrochemistry is less dominant than before. But that is different from a crisis. Structural challenges That does not mean that petrochemistry does not face structural challenges. The sector is particularly energy-intensive and heavily dependent on fossil fuels, not only as an energy source but also as a raw material for plastics and basic chemicals. Even with a more sustainable production process, Ineos' Project One remains dependent on imports of fossil feedstocks. Therefore, strategic autonomy cannot be achieved simply by focusing on a cleaner production process. The honest story is that we must work towards a definitive phase-out of fossil raw materials, and that also means the shrinkage of the petrochemical industry that runs on them. Plastic production versus recycling Another strong point in the Fairfin report is the analysis of the relationship between plastic production and recycling. While ov

Politicians are quickly impressed by stories of disaster within the business world. Research by Daniel Kahneman and Amos Tversky shows that people (including politicians) subjectively weigh loss more heavily than profit of the same size. A sob story about an industry in distress evokes urgency and fear, and can therefore be very effective, especially if the industry threatens to leave.

Policymakers quickly bought into the frame of an industry under pressure, with the Antwerp Declaration as a striking example. In it, the chemical sector, together with European policymakers, pleads for, among other things, more government support, relaxation of rules, and abundant and cheap low-carbon energy.

But is this picture correct? Fairfin's research addresses this and shows that the story of the petrochemical industry is primarily a lobbying tool to obtain government support and the weakening of European environmental legislation, such as the Green Deal. In the article A Crash Course on the EU’s Deregulation Wave, lobby watchdog Corporate Europe Observatory shows how the Antwerp Declaration, along with a strong shift to the right in the European Parliament, led to a draconian wave of deregulation in Europe.

The crisis narrative of the petrochemical industry

The words of the CEO of BASF, who states that the industry in Europe "has its back against the wall", sound alarming. Evonik and Ineos go one step further by warning of massive job losses and a trough that the chemical sector does not seem able to escape. The Antwerp Declaration translates that frame into a political text: "the European transition can only be achieved if basic and energy-intensive industries also remain and invest in Europe."

The nuance of Fairfin

Fairfin punctures this narrative by putting the figures alongside the statements. They analyze the accounts of petrochemical companies in Flanders, and the data on the economic and environmental performance of the chemical sector. In addition, Fairfin looks at whether this industry is indeed so essential for economic prosperity in Flanders, and how emissions and energy consumption compare to the wealth created.

The report shows that, although the sector has had turbulent years, particularly due to the corona pandemic and the energy crisis, it remains structurally profitable. The so-called trough the chemical sector is in is mainly explained by the demand shock caused by corona. Companies like BASF and Ineos have still made significant profits in recent years and are financially healthy. The sector is therefore far from a collective bankruptcy.

Fairfin also shows that the sector emits almost 4 times more CO2 per euro of added value compared to other ETS sectors. The sector also has a high energy intensity, consuming 62% of the final industrial energy consumption in Belgium. In addition, petrochemistry receives support in the form of discounts on energy taxes, compensation for increased energy costs, and untaxed use of mineral oils (i.e. fossil feedstock) in the production process.

What we do see is that the total production (in weight) of petrochemistry in Europe fell by an average of 1.15% annually between 2013 and 2024. Whereas countries like China and the United States are actually growing fast. Together they are responsible for more than 50% of global plastic production. In this, the share of European production has also been declining for years. The result is that European petrochemistry is less dominant than before. But that is different from a crisis.

Structural challenges

That does not mean that petrochemistry does not face structural challenges. The sector is particularly energy-intensive and heavily dependent on fossil fuels, not only as an energy source but also as a raw material for plastics and basic chemicals. Even with a more sustainable production process, Ineos' Project One remains dependent on imports of fossil feedstocks. Therefore, strategic autonomy cannot be achieved simply by focusing on a cleaner production process. The honest story is that we must work towards a definitive phase-out of fossil raw materials, and that also means the shrinkage of the petrochemical industry that runs on them.

Plastic production versus recycling

Another strong point in the Fairfin report is the analysis of the relationship between plastic production and recycling. While governments formulate circular ambitions, petrochemistry continues to invest massively in the production of virgin plastics. Because these remain cheap, recycling struggles to compete economically.

In Europe, plastic production is declining because international competitors can produce more cheaply. China and the United States produce cheaply thanks to state aid and relatively low fuel and feedstock prices. Plastics Europe Netherlands calls this decline in production capacity "a serious threat to the industry's transition to circular plastic". It basically says that you have to maintain polluting companies in order to keep a finger on the pulse for sustainability later on. But Europe can actually steer very well towards sustainability with standard-setting product policies and taxes on fossil plastic. The playbook for making industry sustainable does not say that you should support the fossil industry.

Plastic Trees

The petrochemical industry is trying to position itself as indispensable. For instance, it presents itself as a sector on which the Belgian economy stands or falls. Fairfin calls this the "backbone of the industry", a metaphor emphasizing that all other sectors are supposedly dependent on their products. This image stands in stark contrast to reality: by maintaining the production of cheap virgin plastic, petrochemistry hinders the development of sustainable alternatives. Prevention, recycling, and circular innovation should actually receive the attention that is currently going towards petrochemistry.

Conclusion

The central question is: which industry do Belgium and Europe want to maintain? Do we continue to invest in a fossil sector that is structurally polluting, or do we shift the focus to circular and sustainable alternatives?

The crisis frame of the petrochemical industry turns out to be exaggerated and strategically colored. Fairfin shows that the sector is not in acute distress, but is a structurally polluting and fossil-dependent industry that wants to secure support. Policymakers would do well to view the cry for help for what it is: a frame of a sector that is losing relevance.