Germany's Chemical Industry Must Act Boldly to Survive Climate Transition

The German chemical industry faces a critical challenge: achieving climate neutrality while staying competitive. A new study by VDI Research and VDI-GVC highlights the urgency of balancing ecological goals with economic survival. Experts warn that the era of small, gradual changes is over—bold action is now essential.

The study analysed international roadmaps and strategy papers for the chemical sector. It found global agreement on five key areas: carbon management, defossilisation, circular economy, digitalisation, and the use of hydrogen alongside carbon capture technologies. German research aligns with these priorities but adds detailed scenarios on energy demand, carbon pricing, and risks of carbon leakage.

Since 2020, Europe's energy costs have surged, particularly after the 2022 crisis. Unlike North America and Asia, where prices remained stable, German producers now face higher costs and shrinking global market share. Anette Braun, the study's author, described the situation as an industrial stress test, with new rules reshaping competition.

Vivien Manning, Managing Director of VDI-GVC, stressed that ecological transformation must also deliver economic success. The report calls for six key actions: affordable energy, prioritising real climate impact over carbon leakage, faster adoption of critical technologies, cutting bureaucracy, securing supply chains, and sharing risks between policymakers and industry.

The chemical industry's transition requires clear priorities that balance cost and effectiveness. Without competitive energy prices and streamlined regulations, Germany risks falling behind. The study's recommendations aim to ensure both environmental progress and industrial resilience in a rapidly changing global market.