Competitive Supplier

WHAT ABOUT OUR COMPETITIVENESS?

With electricity accounting for a large proportion of its variable costs, the European chlor-alkali industry is facing significant competitiveness challenges due, in part, to persistent high energy costs.

The geopolitical turmoil triggered by Russia’s invasion of Ukraine in early 2022 further exposed Europe’s vulnerable energy model and its overdependence on volatile global energy supplies. Since then, the cost disadvantage of the European chlor-alkali sector compared to other regions of the world has been exacerbated. Combined with a challenging economic situation, this led to our lowest capacity utilisation rate ever in 2023. Although electricity prices have decreased since their peak levels in 2022, price volatility remains a major concern (especially when compared to other regions of the world).

Similar to Europe’s industry as a whole, European chlor-alkali is at a critical turning point. It is clear though that the right policy actions can restore Europe’s competitive standing on the global stage. The comprehensive package of short- and long-term strategic measures that the EU proposed in early 2025 could, amongst other things, reform Europe’s energy market, so there may be light at the end of the tunnel. However, bold action from authorities is urgently needed to assist here.

2024 HYDROGEN APPLICATIONS

Most of the hydrogen produced in Europe’s chlor-alkali process is used for steam generation and chemical production. However, it also has various other applications as shown in the pie chart.

Learn more about the hydrogen products at https://trees.eurochlor.org/products-of-hydrogen/.

European hydrogen applications 2024
(percentage of total 2,491 million NM³ )

Note: The figure for vented hydrogen varies from that reported elsewhere in this report as it results from a separate questionnaire with a different level of detail.

COMPARISON OF ELECTRICITY PRICE FOR INDUSTRIAL CONSUMERS

The following graph compares the electricity prices in the US with the weighted average values seen in the EU. In 2024, we saw a decrease in the difference to 56 Euro/MWh compared to 88 Euro/MWh in 2023. Despite this reduction, the gap with the US price remains significant compared to the situation in 2021 (9 Euro/MWh).

Source: Eurostat and US Energy Information Administration

CAUSTIC SODA TRADE BALANCE

The production of chlorine and caustic is intrinsically linked as they are co-produced in fixed ratios in the chlor-alkali process. This means that fluctuations in the demand for one product impact the supply of the other. Recent data show a shift in the trend of EU trade of caustic soda with a noticeable decrease in extra-EU27 imports in 2024. Combined with stable figures for production and exports, this trend provides an insight into the current EU situation.

Euro Chlor continues to monitor this alongside discussions with other global regions on trade agreements and tariff countermeasures.

Caustic soda consumption (EU27)

Source: Eurostat

UNITING COMPETITIVENESS AND DECARBONISATION IN ONE FRAMEWORK…

When the new European Commission began work in November 2024, Commission President Ursula von der Leyen reaffirmed the EU’s commitment to stay the course on the energy and climate goals set out in the European Green Deal.

In the subsequent political guidelines though, she also committed to a new strategy to foster Europe’s competitiveness to enable its climate transition in view of the ongoing geopolitical challenges.

Euro Chlor are following the legislative initiatives as they unfold given their implications for the future:

The Affordable Energy Action Plan and the first ‘Omnibus’ packages (which are part of the CID) are measures to (1) address the high energy costs in Europe and secure affordable, efficient and clean energy for all Europeans and (2) simplify EU rules and reduce reporting burdens to make the EU market more attractive for investment.

We welcome these initiatives and will remain a constructive partner in the discussions, but we are keen to see immediate actions to restore our competitiveness.