A decade of opportunity: A 10-year pathway to secure the future of the UK Chemical Industry
The return of an industrial strategy after a six-year absence is a welcome and necessary development for UK manufacturing. With chemicals now formally recognised as being at “the core of Advanced Manufacturing underpinning all domestic manufacturing”, the Chemical Industries Association (CIA) has continued to highlight the industry’s role most recently through its Project 2035 report. To mark six months since its release and to further raise awareness, the Association will host a parliamentary reception on 14th July.
While recent trends point to a steady decline of the Chemical Industry, there remains a narrow window of opportunity to reverse course and re-establish competitiveness. A report from the CIA, Project 2035: The Chemical Industry Transition – Pathways for a Resilient and Sustainable Future, commissioned by S&P Global, explores four potential scenarios for the sector’s future. The findings, however, paint a sobering picture – one in which the UK is drifting toward the least favourable outcome – but the report also provides a clear roadmap to a more resilient and prosperous future.
The chemical industry’s role in modern life is fundamental. From consumer goods to clean technologies, almost everything we depend on contains or relies on chemicals. For over 150 years, chemistry has formed a foundation of industrial development, and the UK has long played a significant role in that story. Yet, despite this proud legacy, the industry’s long terms viability is under threat.
The UK chemical sector remains a cornerstone of the national economy. It provides highly skilled employment, with salaries 27% higher than the national average, contributes 15% of the country’s total exports and a highly productive sector with £200,298 GVA per employee. Its importance is indisputable. But without decisive intervention, its future is uncertain.
Project 2035 sets out the challenges ahead and what needs to be done – by both government and industry – to support economic growth, environmental progress and long-term resilience. The report is clear: the UK chemical sector can and should be a central player in the government’s pursuit of sustainable growth. Yet it is currently at a disadvantage compared to international competitors, many of whom benefit from significantly lower energy costs, supportive carbon policies, and more consistent government backing for manufacturing.
Despite these structural disadvantages, the CIA remains optimistic. The report identifies 17 realistic policy and investment enablers for sector growth, five of which are highlighted as game-changers. These require urgent and coordinated action from both government and industry.
From government, three strategic priorities must be addressed:
- Competitive energy and raw materials: build a wider level playing field opposite competitor energy prices (including removal of the UK-only carbon price support levy).
- Regulation for growth: Carbon policies that fully address carbon and investment leakage and earmark revenue to support industrial decarbonisation.
- Skills for the future: Build a skills partnership between industry, academia, government and trade unions to rewrite the educational and working life of the UK population.
The actions undertaken by chemical businesses across the UK are equally critical to enabling growth, such as accelerating UK carbon capture utilisation and storage, facilitate low-carbon hydrogen production, scale up UK recycling capability, rebuild UK chemical supply chains for a resilient, low carbon economy, ensure research and innovation leads to UK manufacture.
Our Government’s ambitions for economic growth, environmental progress and social inclusion over the next decade will, to a large extent, be realised by key foundation sectors such as the chemical industry.
“The UK chemical industry is the foundation of our economy and our national security. The critical raw materials we supply for life sciences, clean energy, defence, water and food security plus many other needs, can be exclusively made in this country. Project 2035 shows how we can do that”
Martin Ashcroft, Managing Director Tata Chemicals Europe and President of the Chemical Industries Association
“Project 2035 is a massive opportunity for the UK. If we get this right then the UK chemical sector can grow and reclaim its place as the essential supplier to UK and international manufacturing. Government and industry need to move quickly, let’s get on with it.”
Steve Foots, Chief Executive of Croda International
“The Chemical Industries Association report is a stark reminder of what is at risk if we do not act now. The chemicals sector has long been a cornerstone of the UK economy, but without action to ensure a competitive and level playing field, we will lose out to other nations. Collaboration between Government and industry is essential to create an environment that optimises cost to operate, supports investment and delivers solutions needed to achieve Net Zero ambitions.’’
Paul Greenwood, UK lead country manager for ExxonMobil
The vital importance of the chemical industry is beyond question. Failure to act will inevitably result in further site closures and, with 96% of all manufactured goods reliant on chemical inputs, an increasing dependence on other nations to meet even our most basic needs. In light of recent global events – including a pandemic and a war in Europe – can the UK really afford to surrender such strategic capability?
Project 2035 is not just a report, it is a call to action.
Read full report here.
