German Chems Rail Against National Energy Policy

06.03.2014 -

German heavy industry continues to turn the heat up on the federal government to alter its energy policies that companies contend promote renewables at the expense of conventional clean technologies such as natural gas.

Authors of an international study funded by Germany's chemicals and oil & gas industries have urged that the country rethink its "Energiewende" - or "energy turnaround" devised in the aftermath of the nuclear incident at Fukushima, Japan, in 2011.

The study carried out by speciality information company IHS - owner of chemical trade journal Chemical Week, among other publications - said Germany's "hasty" phase-out of nuclear energy had caused energy prices to rise, slowed progress on energy efficiency and led to a greater reliance on coal, thus driving up carbon dioxide emissions.

As a result, IHS said, "North America has become a more competitive location for manufacturing and exporting," especially as shale gas exploitation has driven prices down. The researchers said Germany should develop its own shale gas reserves and cut its targets for an "expensive" build-up of offshore wind power.

Other business-friendly think-tanks have called on Berlin to scrap its so-called EEG legislation, which gives precedence to renewable energy in the power grid, where feasible, and requires consumers and power plant operators to pay an energy surcharge to fund renewables growth.

The verdict is still out on the European Commission's plan to require that Germany phase out special exemptions from the EEG tax for energy-intensive companies - estimated to be worth €500 billion annually - by Dec. 18, 2014. Under pressure, the federal government is trying to reach a compromise with Brussels by the end of March.

At their annual results press conferences, leading chemical executives criticized the rebate phase-out plans, asserting that, in a country where energy prices already are disproportionately high, the additional burden could disadvantage their companies even further in international competition. Chemical makers that produce their own on-site energy are adamant that this continue to be exempted.

Kurt Bock, CEO of BASF, which is eager to begin trials with shale gas exploration in Germany, pointed out that the Ludwigshafen group for the first time this year is investing more in tangible capital assets outside Europe than inside. Werner Baumann, chief financial officer of Bayer, calculated that the loss of the EEG exemption would result in a rise of €172 million in the Leverkusen group's annual energy bill, mostly affecting the plastics arm Bayer MaterialScience.