Energy costs: Industry in Germany is moaning about the gas surcharge

 

If there is one person to be named as responsible in ruining the world’s economy and politics, we should look at German leader Scholz. His politics left Germany without reasonably priced gas. That made all other energy costs sky high. No matter what you use it is expensive. German industry is not able to compete in the market with such energy prices. The renewable technologies are not ready yet. The transition to renewables starting too early is deindustrializing Germany.

This reckless Germany’s behavior made other West countries resort to harshest available sanctions on Russia hoping that Germany’s eager participation in sanctions will make the sanctions work. China, India, Africa and South America made sure that sanctions did not work. The sanctions just hit the economy and political life of the West hard. This backlash is still playing out, it is heavy indeed.  Thank you, Mr. Scholz.

"Many industrial companies have long since begun to convert to alternative energy sources - for which at least the new gas levy is still applied.

Things get heated at Samson in the east of Frankfurt. The chemical baths into which the manufacturer's industrial valves are immersed have to be 80 degrees hot to remove all dirt and grease. The corrosion protection is then applied to the paintwork at 100 degrees. And then the surface is dried, also at 100 degrees Celsius.

In order to be able to generate so much heat, the company built its own combined heat and power plant a few years ago on the company premises in the east of Frankfurt. It runs on natural gas. "We thought we had set ourselves up for the future," says Samson boss Andreas Widl. "And now we have the cost explosion."

Energy costs doubled to nine million euros

Especially if the company is to pay the gas surcharge of 2.4 cents per kilowatt hour from October. 2.4 cents, that doesn't sound like much. But Samson consumes around ten gigawatt hours of gas a year alone. This would only result in additional costs of 240,000 euros due to the new allocation. In any case, the company expects that the energy costs will double as a result of the increased market prices, to nine million euros a year. "The state is making a big mistake with the levy," says Widl, because it is taking more and more money away from consumers and companies in the belief that the state can spend it better than they can.

Like Samson, many entrepreneurs are currently struggling with the new levy. The pipe and hose clamp manufacturer Norma expects additional costs of around 75,000 euros at the Maintal location – in the fourth quarter alone. There, metal clamps in particular are hardened and coated with the help of natural gas heat.

 

This machine supplier is not even one of the largest natural gas consumers in industry. These are mainly manufacturers of cement, lime or bricks, i.e. building materials. Temperatures of up to 1500 degrees Celsius are sometimes necessary to produce glass. The Association of Construction Companies is therefore already warning that construction costs could rise significantly again in the next two years.

 

Profits increase faster than costs

And the chemical industry is also one of the major consumers. Joachim Kreysing, Managing Director of the industrial park operator Infraserv Höchst, describes the gas levy as "a very big burden" in view of the already rising energy costs. "The surcharge is currently very difficult for energy-intensive industry to bear." 

 

It could lead to further production stops because production costs in Germany are no longer competitive.

 

Industry is by no means the largest consumer of natural gas in Hesse. Their most recent requirement of 10,000 gigawatt hours is less than a third of what households, shops and offices use for heating.

And so far, at least, it has coped well with the costs. The Clariant Group, for example, which has a large site in the Höchst Industrial Park, was able to double its consolidated profit in the first half of the year. The chemical group Evonik, which operates several large plants in Hesse, exceeded its previous profit expectations in the second quarter - i.e. after the start of the sanctions on Russia. And Samson boss Widl speaks of a "remarkably good first half of the year" that has exceeded expectations.

In addition, the manufacturing industry has continuously reduced its gas requirements in recent decades, it is now a third lower than in 1990. The pharmaceutical manufacturer Boehringer Ingelheim, for example, is currently building a combined heat and power plant in Ingelheim that is operated with waste wood and is primarily intended to replace natural gas. Construction began a year ago and is scheduled to be completed in 2023.

Norma commissioned a new incinerator in December last year, which uses significantly less gas than the previous plant, as part of the reduction in greenhouse gases. "Compared to last winter, we expect significantly lower gas consumption in Maintal production," says a company spokeswoman.

Heating oil, diesel and coal replace natural gas

The move away from gas has now accelerated considerably. Since the threat of a Russian gas embargo has loomed large consumers have switched to other fuels. Evonik in Hanau's Wolfgang Industrial Park generates 80 percent of its steam in its own coal-fired power plant. Among other things, the group produces lipids there, which are required as a type of packaging for Biontech's new corona vaccine. The Darmstadt site is powered by long-distance steam from municipal waste thermal power station, the plants in Weiterstadt and Steinau are converted to heating oil.

The Hanau metal and components group Heraeus is also in the process of switching to heating oil. "The planning and implementation of specific measures to replace natural gas with heating oil at our main plant in Hanau are making progress," reports energy manager Dietmar Bork. In addition, it will be examined what savings are possible in the heating of buildings.

 

What all this saves in the end is currently not foreseeable.

 

Samson has meanwhile also stored heating oil. In production, explains Widl, special heaters are to be used that run on diesel. The company has also purchased fan heaters for the offices. 

 

In extreme cases, the combined heat and power plant must be shut down because it cannot be operated with alternative fuels.

 

And in the medium term, Widl wants to completely get off the gas anyway. He hopes that the new factory in Offenbach will be able to work almost completely self-sufficient in terms of energy. Instead of fossil fuels, which have to be imported, he wants to use solar energy and geothermal energy there. But it will still take a long time until the planning, approval and erection is complete. 

 

The move is targeted for 2026 – too late to avoid the gas surcharge."

 

Let us hope that everything is fine with the health of Mr. Scholz. The pressure on him seems to be too big to preserve a healthy way of life.