- The chemical-pharmaceutical industry depends on a secure and affordable supply of energy that is climate-compatible. The industry is making its contribution to greenhouse gas reduction, and, in a 2019 study, it outlined how the German chemical industry can become greenhouse gas neutral by 2050.
According to the company’s website news release on November 3, 2022, In order to do this, it needs more than 500 TWh of renewable electricity priced at 4 cents/kWh. On the Chemistry4Climate platform, the industry is working alongside key stakeholders to develop a viable concept for implementing these requirements and others like them.
Since the Russian attack on Ukraine, greater importance has been attached to the issue of securing natural gas: An essential energy source in the chemical-pharmaceutical industry as well as an important raw material for many basic chemicals. Companies have already started reducing the amount they consume to reduce dependence on Russian gas imports. Fuel switching represents another potential provided that it is technically feasible and approved rapidly.
Off-setting rising costs
As a result of the war in Ukraine, gas prices as well as electricity prices have meanwhile reached historic highs and are still at a very high level. This poses major challenges especially for energy intensive and medium-sized chemical companies that compete on the international stage. Many have already hit maximum capacity and have been forced to cut production. If the situation remains this tense, we run the risk of losing competitiveness and jobs in the long term.
Short-term relief measures are urgently needed to lower energy prices and support businesses. The withdrawal of the gas surcharge would be very welcome in this context. The planned measures under the German government's €200bn relief package can make an important contribution to stabilising German industry. Fast and practicable design and implementation will be crucial.
In addition to price-dampening measures, security of supply is a key issue. The crisis shows that there is already a lack of base-load capable electricity supply capacities. All available power generation options should be connected to the grid for as long as the gas crisis persists. In parallel with the expansion of renewables, available lignite and hard coal capacities and the last three German nuclear power plants should be connected to the grid at least until the end of winter 2023/24. This will strengthen security of supply and contribute to more affordable electricity prices.
Power supply plays a decisive role
Electricity will play an increasingly important role in the future – such as in the electrification of industrial processes. Technologies that emit less CO2 will only prevail if competitive prices for the electricity required are guaranteed in the long term. This is not foreseeable in view of rising energy costs. An industry-wide electricity tariff can guarantee that the industry's shift to climate neutrality will succeed
THE VCI IS CALLING FOR THE FOLLOWING
- Guaranteeing the security of supply. Policymakers must continue to pull out all the stops to secure gas supplies in the long term and diversify procurement. Fracking should form part of this, too. All available coal and nuclear capacities should be able to play a role in the electricity market by Spring 2024 to reduce gas-fired generation. Security of supply also needs to be a core element of a long-term electricity market design.
- Enabling competitive electricity prices. A great deal of affordable and renewable electricity will be needed if the industry is to make the transition from energy-intensive practices to greenhouse gas neutrality. The chemical-pharmaceutical industry is advocating for an industry-wide electricity tariff. We need to develop renewable energies using the most cost-effective means possible.
- Rapid, targeted, and unbureaucratic support, especially for particularly hard-hit businesses. The price-dampening measures for the relief packages should now be designed quickly and practicably. As far as the gas price brake is concerned, heat from cogeneration power plants must be included in the subsidy as this heat is central to many chemical processes.
CONTACT PERSON
Heinrich Nachtsheim
Energiepolitik
E-mail:nachtsheim@vci.de
