Energy Transition

Arguments and Positions

The chemical-pharmaceutical industry supports the political goal of the energy transition (Energiewende) to make energy supplies climate-friendly, reliable and affordable. The industry actively contributes to greenhouse gas cuts. In 2019, the VCI highlighted in a study how the German chemical industry can achieve greenhouse gas neutrality by 2050 in technological terms. By then, the industry needs 628 TWh of renewable electricity at a price of 4 cent/kWh. A sound concept is needed on how such an amount of electricity can be reliably provided through domestic capacity expansion and imports from abroad.

In this context, it should not be forgotten that promoting a further increase in renewables also brings relevant cost increases which impact, inter alia, the chemical industry. Irrespective of burden-easing measures for highly energy-intensive companies, the chemical industry is currently paying over 1.2 billion euros p.a. in EEG charge (EEG-Umlage) alone.

Compensation for price increase is needed

Moreover, an acceleration of the coal phase-out to 2038 - as decided by the German federal government - brings higher electricity exchange prices. This is because of gas power plants now becoming the marginal power plant, instead of less costly coal power. Compensation for this cost increase and reliable supplies are essential for the international competitiveness of energy-intensive industries. However, in its draft act the federal government has not committed itself to this so far.

Furthermore, effective impulses are lacking for limiting the costs for the market integration of renewable energies. In particular, grid fees and further charges are rising due to the costs of grid expansion and stabilisation and yet more blocks of costs such as the capacity reserve and the brown coal reserve, redispatch measures and temporary curtailment of renewables due to grid bottlenecks. This development weakens the competitiveness of energy-intensive companies without any additional benefit for climate protection.

Some provisions of the "act collectively amending energy legislation" (Energiesammelgesetz) adopted in December 2018 cause legal uncertainty, especially those on the passing on to third parties of electricity relieved from the EEG charge. This increases bureaucracy in filing applications for the "special compensation rule" (besondere Ausgleichsregelung). Such conditions hamper innovation.

Electricity consumption will climb

Electricity is going to become ever more important in the future - for example, for the digitalisation and electrification of industrial processes and for electromobility. However, technologies with lower CO2 emissions can become established only if competitive prices for the required electricity are guaranteed in the long term - while the EEG charge causes an artificial cost increase in electricity consumption. Therefore, burdeneasing from the EEG charge is vital for energy-intensive companies.

THE VCI IS CALLING FOR THE FOLLOWING

  • Reduce the costs of the Energiewende to a minimum
    The costs for the expansion of renewables and the appertaining infrastructure must be limited by putting the funding of the EEG charge on a new footing. New laws should not bring further burdens which then necessitate relief measures for energy-intensive plants. The planned CO2 pricing within national emission trading is a negative example for this.
  • Make up for rising electricity prices in a way compliant with state aid legislation
    The extra costs of a faster "coal phase out" could total up to a high double-digit euro amount. Due to competitive pressure, the energy-intensive industry responds sensitively to price increases. Therefore, regarding the expected cost increase in electricity purchasing, the German federal government should negotiate with the EU Commission a compensation that is compliant with state aid legislation.

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Contacts

Jenna Juliane Schulte

E-Mail: j.schulte@vci.de