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Global perspective Dede Williams
Germany at the energy crossroads
I
n mid-October 2013, the autumn chill had Germany firmly in its grip, but in the boardrooms of the chemical and other energy-intensive industries, the long-running discussion over energy policy in the country’s post-nuclear age was keeping the atmosphere heated. Nearly a month after the inconclusive 22 September 2013 national elections, industry’s appeals to a newly-elected government to finally determine which way the wind was blowing had proved fruitless. It wasn’t for industrial companies’ lack of trying, although their chances of achieving anything were slim. As yet, there was no new government to appeal to and in the vacuum, energy prices continued to rise. This was in fact the scenario the chemical industry had hoped to avert. The failure of the previous coalition government of Angela Merkel’s Christian Democrats with the pro-business Free Democratic Party (FDP) to recapture the Bundestag made the hoped-for new course look frustratingly shaky. Well before the hot phase of the election campaign, corporate chieftains and their lobbies had drawn up, and successively presented, ideas for reducing Germany’s energy prices to a level regarded as competitive at least with the rest of Europe – even if much of Europe already was struggling to keep on an even keel with shale gas-privileged American competitors. The elephant in the room, wedged tightly between the interests of industrial companies seeing their livelihood threatened by high energy prices and environmentalists viewing high prices as a deterrent to ‘wasteful’ products and processes, was, and is, the so-called energy turnaround – a plan devised
by Merkel’s government to retool the country’s energy sector after exiting nuclear power. Especially distasteful to industry from the outset is the Renewable Energy Act (Erneuerbare Energien Gesetz, or EEG), which levies all energy consumers to subsidise wind and solar power. At its inception, this law, which the chemical industry association VCI has dubbed a ‘planned economy approach without a plan’, was foreseen to create a balance in the energy mix. But the approach has been chaotic and the plan simply has not worked, chemical producers insist. ‘Germany is at a crossroads of critical decisions about its future energy policy. The current national energy strategy has become disconnected from its original objective to deliver competitive energy while reducing CO2
emissions’, the
association said in October 2013. While the EEG has been an effective
tool for increasing the share of renewables, it has come at the cost of rising energy prices and is as detrimental to Germany’s attractiveness to investors as the country’s ‘rigid labour market’ was a decade ago, the association remarked. High energy costs are a ‘particular challenge’ to German exports, it noted. Exports account for more than half of GDP, and the chemical industry’s ratio is even higher. Without restraint, the burden for the chemicals sector from the Renewable Energy Act alone will increase to over €1bn in 2014, despite price breaks granted to energy-intensive companies, VCI president Karl-Ludwig Kley, ceo of Merck KGaA, predicted in Berlin as he introduced a new study, The Challenge to Germany’s Global Competitiveness in a New Energy World. Compiled by
The chemicals sector looks to Angela Merkel for a change in direction
‘Especially distasteful to industry from the outset is the Renewable Energy Act (Erneuerbare Energien Gesetz, or EEG), which levies all energy consumers to subsidise wind and solar power’
the global economic research grouping IHS and financed by the VCI, other German business groupings and unnamed companies, this offers ‘realistic alternatives’, the association believes. As with most things involving Germany or energy, the plan is complex. It points up two scenarios – one labelled ‘high priced’, the other ‘competitive’. The worst case scenario contains all the horrors that could befall chemical producers, such as ‘rapid development of renewables’ and the removal of price breaks to energy intensive companies. Its ‘good twin’ assumes a more moderate pace of renewables development and an increased role for geothermal energies, including shale gas. The conclusions drawn from the
study are in fact the same ones the industry arrived at some time ago, now underpinned by comprehensive charts and tables. The key objective, as Kley explained it, is that the new government suspends its support for new alternative energy plants until the EEG has been revamped. ‘Furthermore,’ he said, ‘it is essential for the energy turnaround to have a European orientation. Germany is no island’.
Dede Williams is a freelance journalist based in Frankfurt, Germany who specialises in the chemicals sector
Chemistry&Industry • November 2013 31
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