Brussels The chemical industry wants to achieve the transformation to climate neutrality without being protected by trading instruments. “I am vehemently of the opinion that climate protection and competitiveness can go together,” said BASF boss Martin Brudermüller at the European conference of Handelsblatt, “Tagesspiegel”, “Wirtschaftswoche” and “Zeit”.
Under these conditions, one comes to other regulatory proposals than those currently available, says Brudermüller. He mentioned the CO2 border adjustment proposed by the EU, which is intended to ensure that goods from third countries with a high carbon dioxide load are more expensive when imported into the European Union. In this way, the EU wants to protect the industry from undercutting by foreign competitors.
The instrument known in Brussels as “Cbam” (“Carbon Border Adjustment Mechanism”) is highly controversial because it could trigger trade conflicts. Brudermüller’s demand is therefore to expand renewable energies even faster and thus keep prices in Europe competitive.
In addition, there is a need for cross-border distribution networks for electricity and hydrogen as well as faster planning processes.
The previous federal government underestimated the need for electricity, which is why the pace of expansion is too slow. In this way, BASF alone will quadruple its power consumption, predicted Brudermüller.
Intensive dialogue: Uwe Jean Heuser (Die Zeit) and BASF CEO Martin Brudermüller (right).
(Photo: Phil Dera)
“Cbam entails many more risks than opportunities, especially for strong export sectors such as the chemical industry,” said Wolfgang Große Entrup, Managing Director of the German Chemical Industry Association (VCI), the Handelsblatt. “It is at stake whether we will continue to have a competitive export industry in Europe.”
The background to this is the concern that Cbam could make competition within Europe fair, but that European companies would suffer a considerable disadvantage when it comes to exporting: If they were to pay the full taxes on their CO2 emissions within the EU, they would have to pay the prices for their Raise products in the world market.
However, export aid has not yet been included in the EU’s climate package. The border adjustment law is currently being voted on by the member states and in the European Parliament.
There are considerations to install an emergency brake at Cbam, which can be pulled if the competitiveness of the company suffers. It is still unclear whether there are enough supporters for such a mechanism among the member states.
EU Commissioner Timmermans urges haste
Time is running out for changes to the law. France wants to finish as many parts of the climate protection package as possible during its presidency, i.e. by the end of June. President Emmanuel Macron is a supporter of Cbam.
The EU Commission is also in a hurry. After the summer break, negotiations between the Council and Parliament should begin, Vice President Frans Timmermans announced at the European Conference. “We have to do this so quickly because there are only eight years left until 2030. So we have no time to lose,” he said.
Timmermans responded to objections by referring to the importance of the task: “If we don’t change quickly, then our children and grandchildren will fight and fight wars over water and food. That must not happen to us.” Most companies in industry no longer questioned the importance of the task. The car companies almost “embraced” the topic.
Nevertheless, it is important to ensure that the project is accepted: “The issue of sustainability will only be solved if we are also socially sustainable, if people see that nobody is left behind.”
But that is being doubted in the current situation, for example in Spain, where electricity prices have risen more in recent months than in almost any other country. Deputy Prime Minister Teresa Ribera is therefore working on a different design for the electricity market.
She wants to ensure that gas-fired power plants are remunerated so high that electricity production pays off even with rising gas prices. However, other energy sources would not have to be remunerated with the same high prices.
Ribera sees himself slowed down by Brussels. At the moment it looks like this: “We not only pay additional money for the part of the electricity that is produced with gas, but also accept that other technologies receive the same remuneration.”
The Commission’s response to the Spanish initiative is that the states are allowed to support poor private households and sections of the population from their budgets, but not to intervene in the market. Spain cannot accept that.
Such an approach is likely to destroy trust in Europe. “People cannot understand why we continue to support this failure, which is a failure by regulators,” Ribera said.
EU Energy Commissioner Kadri Simson, on the other hand, emphasized the exceptional nature of the situation: A “perfect storm of various factors” put Europe in this position. The EU Commission is preparing for future shocks and is also working on promoting joint gas purchasing and gas storage.
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