AAt first glance, it looks like a tempting model: companies that reduce their consumption of expensive natural gas should also receive state money so that the storage tanks can be filled more quickly for the coming winter. The auction procedure proposed by Federal Minister of Economics Robert Habeck (Greens) at the weekend has met with a fundamentally positive response in the leading industry associations – after all, such tenders would be less drastic than forced rationing of gas consumption, as prepared by the Federal Network Agency for the worst case. The Association of the Chemical Industry (VCI) praised the Habeck Plan, which was previously only known in outline, as a “market-based instrument”.
More than a third of Germany’s natural gas consumption is accounted for by large industrial companies, 13 percent goes to trade, commerce and services. That works like a big lever, but it is actually difficult, at least in the short term, to reduce the gas consumption of companies. The Federal Network Agency is trying to find out how big the savings potential is by asking the 2,500 largest gas consumers.
Should the federal government declare an emergency on the gas market, these companies would have to be prepared for cuts. The industry association BDEW estimates the short-term savings that industry can make within a year at around 8 percent. Despite rising costs, many companies and production processes simply cannot do without natural gas. Switching the power supply to more coal is easier.
Around 12 percent of natural gas consumption recently went into power plants. That is less than the consumption of the chemical industry, which has a share of around 15 percent. According to the VCI, the potential for savings is extremely limited. Of the 135 terawatt hours of gas, only one or two could be replaced by alternative fuels.
Industry leader BASF, the largest industrial gas consumer in Germany, did not want to comment on the Habeck plans on Monday “yet”. All locations in Europe are currently supplied with gas as required. In the event that deliveries continue to decline or are even stopped and the federal government announces the third stage of the emergency plan for gas, according to BASF, a “special alarm plan for natural gas” will take effect at its headquarters in Ludwigshafen.
It was “thought out in detail” how the group would react to cuts or pressure fluctuations. As long as the supply does not fall below around 50 percent of the maximum requirement, the production network can continue to be operated at a reduced load. If the gas supply falls below 50 percent, the site would have to be shut down.
“For most companies there is no alternative”
Another major consumer is the steel industry, which needs as much natural gas per year as all private gas heating systems in Berlin and Munich. With 2.1 billion cubic meters, steel accounts for around 6 percent of industrial demand. Around half of this is required in the rolling mills that process the steel into sheets. About a third goes into crude steel production.
The President of the Steel Industry Association, Hans Jürgen Kerkhoff, supported Habeck’s plan for a tendering process. “In the short term, however, natural gas can hardly be replaced in the processes of steel production”. Due to the overall economic importance, it is important to keep the steel-based supply chains running and to avoid plant damage.
According to the Economic Association, further adjustments would have to be switched to operation with hydrogen or to electrical systems. Some of the burner technologies required for this are not yet available, and significant conversions, new permits and grid connections would also be necessary. In the paper industry, natural gas accounts for around 55 percent of the total fuel. “For most companies there is no alternative,” says the association’s president, Winfried Schaur. According to an earlier survey, no more than 10 to 15 percent of consumption could be replaced by heating oil, coal or electricity-based steam generation over the year.
The auction plans at the glass manufacturer Schott are generally approved. However, the company refers to its own particularly critical situation. “We support the idea, but unfortunately we cannot do without gas,” said a spokesman. In order to ensure production, glass manufacturers depend on the permanent heating of the melting tanks. The Düsseldorf packaging manufacturer Gerresheimer does not see a major risk of being cut off from the gas supply. “We are systemically important, several governments have already confirmed that to us,” said CEO Dietmar Siemssen of the FAZ. In addition to packaging made of plastic and glass for the cosmetics industry, the company manufactures many products for pharmaceutical companies.
Volkswagen has already changed course at its Wolfsburg headquarters. There, VW operates several power plant blocks in which hard coal has been burned up until now. From November they should run on gas and around 1.5 million tons of CO2 save per year. Because of the risks from the Ukraine war, the group is delaying the changeover. The aim is to “continue to use hard coal as an energy source and, for a transitional period, to use the existing systems to meet the electricity and heat requirements for the Wolfsburg plant and to supply heat to many private households in the city,” says a spokesman.