Europe’s incomplete dream for green autonomy

The paracetamol to relieve the pain of a headache, the packaging to keep food fresh, and the tubing used in a hospital IV line, all originate from a barrel of crude oil. Numerous everyday products depend on fossil-based carbon and hydrogen molecules. While recent geopolitical shocks (e.g., Russia’s invasion of Ukraine, Iran conflict) have exposed Europe’s energy dependence, they have masked Europe’s dependence on fossil-based feedstocks for plastics and pharmaceuticals.

The EU’s Green Deal and Clean Industrial Deal correctly identify fossil fuel dependency as a security issue. However, it is framed solely as an energy problem. Fossil fuels serve not just as energy sources but as raw materials for the products that underpin modern life.

This post examines why the EU’s feedstock dependency poses a significant economic and security threat. Failing to address it could even undermine the climate transition. Achieving strategic autonomy will require Europe to address how it powers itself and what it makes.

From a barrel of oil to the products around you
To understand the feedstock argument, one needs to understand refineries. Refineries separate crude oil into different products. Diesel, gasoline, marine fuels and kerosene represent the majority of the output and serve as energy sources. Approximately 10% of the output, naphtha and LPG, serve a different purpose. They are used as raw materials for ethylene and propylene from which plastics, pharmaceutical precursors, and thousands of industrial chemicals are derived. Natural gas plays a parallel role as the primary feedstock for ammonia and methanol.

The petrochemical industry consumes 11% of global oil demand and 8% of natural gas demand, of which half is consumed as feedstock. This means carbon and hydrogen molecules are embedded into the products, not burned for energy. This means the solution is de-fossilising, not decarbonizing. This process is not simply a matter of switching energy sources, but requires alternative sources of carbon and hydrogen. Two sectors illustrate the dependency most clearly, namely plastics and pharmaceuticals.

Plastics, the largest downstream consumer of petrochemicals, appear in various applications, such as packaging, medical devices, construction, electronics and automotive. Their lightweight, design versatility, durability and low cost have made them a cornerstone of daily life. All of which begin as crude oil and natural gas.

Pharmaceuticals present an even more critical case. Common medications, such as paracetamol and ibuprofen, depend on petrochemical compounds. Beyond active pharmaceutical ingredients (APIs), the chemical sector supplies advanced polymers, speciality materials, implants and packaging, which are specifically designed for pharmaceutical products.

Europe’s industrial retreat, by the numbers
Europe’s petrochemical sector has collapsed in recent years. The energy crisis following the invasion of Ukraine devastated European producers with significantly higher production costs than global competitors. Between 2022 and 2025, 37 million tonnes of capacity shuttered and nine steam crackers closed.

Europe’s share of global plastics production plummeted from 22% in 2006 to just 12% in 2024, even as global production continued to rise. Europe is effectively transforming into a net-importer of plastics, increasing its dependency and vulnerability.

The pharmaceutical sector tells a similar story. Europe’s global market share fell from 48% in 2014 to 30% in 2023. Upstream production of less complex products relocated to India and China, where cheaper feedstock and labour provide competitive advantages. This relocation has made the European pharmaceutical value chain dependent on non-European suppliers for over 74%. A critical point to note: China and India are themselves heavily dependent on oil and gas from the Middle East, which is now destabilized by the Iran conflict. Europe’s vulnerability simply moved geographically, but did not disappear.

When commercial vulnerability becomes a security concern
The complexity of modern supply chains means that geopolitical shocks cannot be quickly resolved for plastics and pharmaceuticals. Short-term relief is implausible and long-term mitigation requires fundamental change.

This is not an abstract risk. In recent years, European countries already reported critical shortages of 136 medicines, a problem the European Court of Auditors linked in part to Europe’s reliance on Asian producers. Plastics show the same dynamic playing out in real time. Plastic prices surged following the conflict in the Strait of Hormuz, with average prices for standard grade virgin plastics in May 2026 trading approximately 69% higher compared to previous year. The same structural dependency could lead to shortages of basic medicines and more expensive everyday plastic-wrapped goods for European consumers.

Alternative feedstocks offer some potential. Plastics recycling and biomaterials could reduce fossil dependence. Yet several roadmaps assume that virgin fossil carbon will remain essential through 2050 (e.g., IEA, ICIS, Plastics Europe). Moreover, alternative feedstocks will remain significantly more expensive than fossil-based alternatives for the foreseeable future. European producers cannot compete with cheaper fossil-based imports without policy support. Without local production capacity, Europe’s supply chain remains vulnerable.

As Europe’s local supply of chemical building blocks disappears, the plastics and pharmaceutical sectors will face rising costs and deepening dependency. They will either relocate to regions with cheaper feedstock access, or they will shrink. Neither outcome serves European strategic interests.

Toward a feedstock security policy agenda
The EU’s Green Deal and REPowerEU correctly identify fossil fuel dependency as a security threat, but they frame it narrowly as an energy problem. The Clean Industrial Deal recognises the strategic importance of the European industrial base, but lacks the feedstock dimension. While policymakers promote bio-based feedstocks, chemical recycling, and green hydrogen-derived chemicals, they have failed to recognise feedstock transition as a matter of strategic autonomy.

This oversight has consequences. Each geopolitical shock that disrupts oil supplies increases the risk of industrial closures and relocation. Europe needs targeted policy interventions to reduce carbon leakage and secure capacity in materials critical to society. Also, it seems existing tools could be inadequate. The Carbon Border Adjustment Mechanism, for example, was designed for simple supply chains. It cannot handle the complexity of plastics and pharmaceuticals, where production spans multiple countries and involves dozens of intermediate steps.

Three interventions are essential. First, policymakers must create demand for alternative feedstocks through procurement mandates and regulatory requirements. Second, they must invest in alternative feedstock technologies to bridge the cost gap with fossil-based alternatives. Third, they must redesign trade and industrial policy instruments to account for supply chain complexity. Without these measures, Europe’s chemical and pharmaceutical sectors will continue to shrink, relocate, or become dependent on unstable suppliers. The transition to a climate-neutral economy cannot succeed if it ignores the feedstock dependency that underpins modern life.

Conclusion
Europe’s climate transition cannot succeed if it ignores the feedstock dependency that underpins modern life. The EU’s Green Deal and Clean Industrial Deal correctly identify fossil fuel dependency as a security threat, but limit it to an energy problem. Policymakers must recognise that securing strategic autonomy requires addressing not just how Europe powers itself, but what it makes.

Without targeted interventions, Europe risks trading energy dependence for material dependence. The window for action is closing. Each year of delay makes relocation more likely and recovery more difficult.

The path forward is clear: integrate feedstock transition into the Clean Industrial Deal, invest in alternative feedstock technologies, and redesign policy tools to account for supply chain complexity. The transition to a climate-neutral economy is incomplete without a transition away from fossil-based feedstocks.