Europe’s industrial future is under threat – but policy reform can change that

Close the innovation gap. Chart a decarbonization path. Strengthen economic security.

These are the priorities detailed in Former Italian Prime Minister Mario Draghi’s 2024 report on the future of European competitiveness.

It has been one year since this report was published. But the EU’s industrial competitiveness is still under threat.

Why? Bad policy.

Europe’s regulatory environment has become increasingly complex and burdensome. Two pieces of policy—CSDDD and proposed rules on advanced recycling—are particularly concerning.

And without reform, they will impact current and future investment in the EU, including by us.

CSDDD will impose an excessive regulatory burden on companies. It mandates climate transition plans that are not practical. Violations could result in enormous penalties, as much as 5% of global revenue. And EU member states could make them higher.

What’s more, it imposes these requirements well beyond its borders. Companies with operations in other countries but doing business with the EU would still have to comply with these requirements across their entire global supply chain.

We aren’t the only one voicing concerns. U.S. Secretary of Energy Chris Wright recently penned a letter with Qatar Energy Minister Saad Al-Kaabi calling out CSDDD’s potential impact on the supply of natural gas to Europe.

The EU’s proposed approach to advanced recycling is equally problematic. Advanced recycling is a proven solution to plastic waste, and we’ve already processed 54,000 metric tons of plastic waste using this technology at our Baytown facility in the U.S.

But the EU’s proposal favors standalone recycling facilities over leveraging existing integrated assets – like ours. This approach picks winners and losers. It discourages innovation and flexibility.

This doesn’t just make investment in this technology uneconomic; it limits the EU’s ability to meet its own recycling goals. We’ve had to pause two projects totaling more than 100 million euros of investment in Antwerp and Rotterdam due to the EU’s proposed rules. That also means 80,000 metric tons of plastic waste each year that won’t be processed and will likely go to incineration or landfills.

Our opposition to these policies does not reflect a change in our approach to sustainability. What we oppose is a regulatory approach that makes it impossible to achieve these sustainability milestones while remaining competitive.

Not only are we a proponent for emissions reduction, we have one of our three business lines focused on it. Our Low Carbon Solutions business is actively advancing technologies to reduce emissions while continuing to meet global energy and essential product needs, resulting in significant planned investments between now and 2030.

But due to the regulatory burden in the EU, virtually none of that investment is heading to the EU.

The consequences of bad policy are clear: If CSDDD is implemented as proposed, it will force many companies to scale back or cease operations in the region. And if the EU cannot provide a regulatory framework that supports a realistic business case for advanced recycling, it will send more plastic waste to landfills or incinerators.

The EU needs policies that are constructive, not punitive. ExxonMobil’s European manufacturing facilities are among the best in Europe, due in large part to recent investments in them. We want to realize the benefits of these long-term investments, and maintain a strong business presence in Europe. But unless these policies are reformed, they will significantly impact our ability to invest and operate there.

Reform isn’t optional – it’s essential.