Oil, electricity and gas more and more expensive - chemical association warns: "This is a huge problem"

Created: 01/24/2022, 20:12

By: Thomas Schmidtutz

BASF plant in Ludwigshafen: The high energy prices are causing more and more problems for the industry, which has been accustomed to success.

© Uwe Anspach/dpa

The chemical association VCI views the development of energy prices with growing concern.

The first companies would already have to reduce their production, warns VCI Managing Director Entrup. 

Munich – The high prices for electricity and gas are not only a burden for consumers, but also for industry.

Above all, the energy-intensive chemistry will feel the consequences, explains the general manager of the Association of the Chemical Industry (VCI), Wolfgang Große Entrup to

Mr. Große Entrup, energy costs have risen drastically in recent months.

Chemical companies are traditionally among the largest consumers of energy.

How serious is the situation?

The electricity and gas price shock is a huge problem for our industry.

Energy plays a major role in many processes.

We are already seeing the first production declines in processes that are heavily dependent on natural gas.

This affects, for example, the production of ammonia and unfortunately also affects our customers.

For example, with the AdBlue additive for diesel cars or fertilizers for agriculture.

The cost burden on companies reached record highs in the course of 2021.

The situation is currently extremely problematic.

What does that mean for the companies? 

We represent almost 2000 companies.

In a recent survey, almost two-thirds of the companies surveyed reported that energy prices are massively impeding their operational processes.

At least in basic chemicals, cost increases were largely passed on to customers due to good demand.

But overall, every sixth company failed when trying to pass on higher costs, at least in part.

Recently, electricity prices have also risen sharply in this country.

Industrial electricity is already more expensive in Germany than in almost any other European country.

Now the new economics minister, Robert Habeck, is also planning a turnaround in climate policy.

How dangerous is this development for the competitiveness of German chemical companies?

First of all: climate protection is an important concern for the industry. We very much welcome the fact that the federal government now wants to use the emergency program to remove the huge stumbling blocks in climate protection. In order for companies to spend money on climate protection investments on a large scale, we need maximum speed, both in the expansion of renewables and in the investment conditions for industry. And that brings us to the topic of competition. Further increases in electricity prices not only threaten the competitiveness of existing production, they are also very damaging to the necessary transformation towards more climate protection.

Our electricity requirements will increase massively, since in many cases climate protection technologies are based on electricity.

For our industry alone, the new processes will require roughly the entire current German electricity production over the next few years.

This shows the magnitude of the challenge that lies ahead of us.

Because this electricity not only has to be green, but also available around the clock and at an internationally competitive price.

Because we are and will remain an export industry.

VCI General Manager Große Entrup: Competitive electricity price "need of the hour"

Wolfgang Große Entrup: The general manager of the Association of the Chemical Industry calls for a significantly lower electricity tariff for industrial customers.

© VCI

In order to prevent the worst, the head of Wacker Chemie, Christian Hartel, has just called for the introduction of an electricity price cap.

According to this, there should be a state-guaranteed price for industrial electricity in the future, which is linked to a European electricity price basket.

The state should then step in for all charges above the price limit.

What do you make of it?

In order to remain competitive in the future and to be able to handle the transformation, an internationally competitive industrial electricity price is the order of the day.

Low electricity prices are the best way to protect the climate.

The new federal government should take this to heart and put the issue at the top of its agenda.

Where could a corresponding benchmark lie?

We have calculated this and proven it with our study "Roadmap 2050": The benchmark is 4 cents per kilowatt hour.

We are still miles away from that today.

Across Europe, the bulk buyer price for a kilowatt hour averages 12.83 cents per kilowatt hour.

Could German companies also live with that?

That depends on the electricity intensity of the companies and the competition they face.

This price is clearly too high for the particularly electricity-intensive companies in our industry.

But we want to move away from oil and gas and towards electricity.

This price is becoming an extreme burden for more and more companies and thus hinders climate protection.   

In order to reduce electricity costs, the EEG levy would also be an option.

According to the coalition agreement, it should cease to exist on January 1, 2023.

Is that enough or does the federal government have to get here earlier?

The sooner the better.

In fact, the EEG surcharge is still the largest government-related surcharge on the electricity price.

That is why we have been calling for years to abolish the EEG surcharge and to finance the promotion of renewable energies from the budget.

Again: Every day earlier helps the climate and relieves the stricken middle class. 

Despite the recent economic slowdown due to the corona pandemic, the VCI has announced a new record year for 2021.

You then forecast an increase in sales of 15.5 percent to a total of 220 billion euros for 2021.

Did it work out?

It looks like this.

The official figures for the industry as a whole are not yet available.

But there is currently much to suggest that our forecast is valid.

What do you expect for 2022 in terms of sales?

Another addition?

And if yes, on what scale?

Despite the negative factors in energy prices and the delivery bottlenecks, we mostly expect a further increase in sales in Germany and abroad for 2022.

Our forecast for the current year: sales should grow by five percent to 231 billion euros.

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