Energy costs shut chemical plants

At Chemelot, the vast industrial complex in the Dutch province of Limburg, Fibrant has closed three of its seven factories. Sabic, owned by Saudi interests, and OCI, linked to Egypt, have sold plants on the same site. These places do not work like a row of separate sheds. One factory's waste heat, by-product, pipeline or customer is often another factory's input. Remove one part and the economics of the rest start to weaken. The same thinning out is now visible in Ludwigshafen, Antwerp and southern Italy, pushed by a cost gap that Brussels is trying to narrow before more of Europe's industrial base moves elsewhere.

Energy as power bill and raw material

Chemical plants do not simply use energy. They turn fossil molecules into things the rest of the economy depends on. Natural gas and oil derivatives are fuel, but they also become fertiliser pellets, plastic resins and pharmaceutical ingredients (IEA). When gas prices rise, the plant is hit twice: first through the electricity bill, then through the cost of the raw material itself. European producers pay roughly double US electricity prices, according to independent energy modelling (Energynews). In chemicals, that is not a marginal disadvantage. It changes where production makes sense.

In mid-July 2026, Germany's spot gas price stood at 57.8 €/MWh, day-ahead electricity averaged 113.0 €/MWh, and carbon-emission allowances under the ETS, the EU system requiring companies to buy permits for every tonne of CO₂ they emit, cost about €79 per tonne (BDEW). Most Asian competitors do not face energy bills or carbon costs on that scale. German chemical production remains more than 20% below its 2021 average, according to industrial monitoring data (NZZ).

The jobs are moving, not disappearing

BASF's workforce in Ludwigshafen reportedly fell from 33,370 at the end of 2024 to about 30,000 full-time posts. At the same time, the company is putting €8.7 billion into a new site in Zhanjiang, China (finanzen.net). BASF says the Chinese investment is partly about serving Asia's growing demand, not simply avoiding German costs (BASF). That may be true. The result is still a shift: fewer European jobs, more Asian capacity.

For Malta, this is not only a northern European industrial story. Small economies live off supply chains they do not control. A disruption in fertilisers, plastics, packaging or pharmaceutical ingredients eventually turns up in import costs, construction prices, medicines, agriculture and the everyday goods unloaded at the Freeport. When Europe loses basic industrial capacity, small island states do not get a special lane at the queue.

In Brindisi, southern Italy, unions warn that a protocol signed in March 2025 sets out the gradual shutdown of all basic-chemicals operations, the commodity ingredients other manufacturers build on, at the Versalis plant (BrindisiTime). The unions are not rejecting the green transition. They are asking for job guarantees and a national plan before factories close. In Belgium, TotalEnergies plans to shut one of its two Antwerp steamcrackers, plants that break oil-derived feedstock into the building blocks for plastics and chemicals, by 2027 (chemietechnik.de).

Brussels tries to slow the pressure

The European Commission's July 2026 package proposes slowing the pace at which the ETS cap falls after 2030, extending the free emission permits that protect industry from carbon costs, and creating a €100 billion Industrial Decarbonisation Bank. The Commission says large-scale electrification could cut Europe's fossil-fuel import bill by €260 billion a year by 2040 (European Commission). The Flemish government is already expanding compensation for indirect carbon costs in electricity prices to more energy-intensive sectors, including chemicals (vraagenaanbod.be).

The trade-off is plain. The ETS has delivered: emissions from covered sectors have fallen by roughly half since 2005, making it one of the few EU climate instruments with a record that can be measured rather than promised (Clean Energy Wire). Loosening the cap risks helping older fossil-based plants while penalising companies that have already spent money on cleaner processes (Energy Market Price).

Europe is trying to close dirty production before the clean replacement is cheap enough to operate at scale. The Commission's package buys time. The test is whether governments use it to build cheaper clean power, stronger grids and viable hydrogen supply. Compensation can keep a factory open. It does not, by itself, make that factory competitive.