The UK chemical industry is a silent powerhouse. With chemical production accounting for 15% of total UK exports and £200,000 in gross value added (GVA) per employee, plus salaries which are 27% above the national average, the chemical industry is a key sector of the British economy. Yet despite its strategic importance, the sector has faced years of stagnant output and under-investment, caused by increasingly fierce international competition. To address this, the British government and industry leaders have launched a decade-long strategy to revitalise British chemical manufacturing and secure its future.

But can the UK’s chemical industry really be saved with this plan?

The past decade has not been kind to UK chemical manufacturers. Flat or declining output has become the norm, as global competitors benefit from cheaper energy, less stringent carbon policies, and more supportive industrial strategies. If this trend continues, the UK risks losing a sector essential to clean energy, pharmaceuticals, defence, and advanced materials.

Many of these sectors rely on specialised chemical inputs that cannot be easily sourced or substituted. This means that if the UK loses its domestic chemical output capacity it would be increasingly dependent on imports which could expose its wider economy (and even its defence) to supply chain shocks.

Project 2035: A Roadmap for the Future

In response, the Chemical Industries Association (CIA), in partnership with S&P Global, has developed Project 2035—a strategic vision to reverse decline and reposition the UK as a global leader in sustainable chemicals.

This it hopes to do by outlining a scenario it calls “Transformative Growth”—a future where the British chemical industry is a thriving, decarbonised, and export-competitive sector, which once again leads the world in industrial chemical output and innovation.

But reaching this scenario will require coordinated action from both government and industry. Here are the steps it plans to follow:

The Government’s Role: Three Strategic Priorities

1. Competitive Energy and Materials Costs

UK energy costs are among the highest in Europe. Removing the carbon price support levy—unique to the UK—and aligning with international benchmarks is essential to level the playing field for British chemical producers.

2. Smarter Carbon Regulation

Current carbon pricing schemes inadvertently penalise domestic production and increase carbon leakage. Reforms are needed to ensure policies both incentivise decarbonisation and protect local industry. Crucially, revenue from carbon pricing should be ringfenced to support green industrial upgrades.

3. A Collaborative Skills Partnership

A skilled workforce is key to industrial revival. The CIA is proposing a new partnership among industry, government, academia, and trade unions to build the next generation of chemical engineers, technicians, and sustainability experts.

Industry Commitments: Investment and Innovation

The chemical industry is not simply waiting for government action. Companies are already investing in:

• Carbon capture, utilisation, and storage (CCUS) to cut industrial emissions.
• Low-carbon hydrogen to decarbonise core chemical processes.
• Circular economy systems, including advanced plastics recycling.
• Re-shoring of R&D and production, ensuring UK innovations are scaled in domestic facilities.

These innovations will, the plan’s authors believe, increase resilience, reduce reliance on imports, and align with the UK’s climate goals.

“The UK chemical industry is the foundation of our economy and our national security,” says Martin Ashcroft, Managing Director of Tata Chemicals Europe and President of the CIA. “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.”

If successful, Project 2035 could deliver a resurgence in chemical manufacturing, creating high-quality jobs, increasing exports, and positioning the UK as a leader in clean-tech chemicals. Failure, however, would deepen the UK’s reliance on imports—96% of manufacturing already depends on imported chemicals—and risk further site closures.

“Project 2035 is a massive opportunity for the UK,” notes Steve Foots, CEO of Croda. “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.” He also acknowledges that under its current progress, UK chemical companies are drifting towards failure. “Government and industry need to move quickly,” he adds.

There is no denying the chemical industry’s critical relevance. Inaction will unavoidably lead to more site closures and a growing reliance on other countries to supply even our most basic needs. As such, the UK cannot afford to give up such strategic capabilities in the face of recent world events, such as a pandemic and a war in Europe.

“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,” says Paul Greenwood, UK lead country manager for ExxonMobil. “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.’’

Project 2035 provides a clear pathway to revitalise the UK chemical sector. With the right government reforms and continued industry leadership, the UK can reaffirm its position as a global chemical powerhouse. But this opportunity will not last forever. A ‘wartime mindset’—urgency, coordination, and ambition—is needed to seize this decade of opportunity.

As Greenwood concludes, “The Chemical Industries Association report is a stark reminder of what is at risk if we do not act now.”

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