Sustainability as a megatrend has become “trendy” in the truest sense of the word. Driven by the world’s financial markets, the issue of sustainability has made it into the power centers of industry. They are anxiously looking for ways (out) of being able to score points in the field.
But fear has never been a good advisor. Fear of one’s own failure because one recognized the “trend” too late; Fear of what might happen if you don’t get enough political support; Fear of being responsible for the fact that one’s own traditional company could go under. There’s a lot of pressure on some people’s shoulders right now.
Of course, the fears of company leaders are justified. As an entrepreneur, if I tried to get investors excited about a business model based on energy subsidies, I would be laughed at outright.
It is all the more astonishing that not everything that could be done to reduce the pressure is still being done. One hears the call for subsidies, not for innovations.
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Even the war in Ukraine has so far not led to any notable industrial modernization campaign. Although the dependencies are known to all decision-makers and it is probably only a matter of time before there is a shortage of energy supply.
It still seems easier to hold out a hand to the state than to change something yourself.
Green innovations make CO2-neutral production realistic
Most of the production processes, especially in high value-added areas such as the production of specialty chemicals and pharmaceuticals, are decades old. The vast majority have never been optimized using computer-aided modelling, which regularly results in double-digit energy savings.
Reducing the use of energy is part of what is known as “green chemistry”. She guides scientists with twelve basic principles to be able to transform industry towards a non-toxic circular economy. Thanks to green innovations, CO2-neutral production is suddenly becoming feasible.
>> Read here: “This will get a new dynamic”: BASF starts restructuring of the company worth billions
How much longer can we afford to turn a blind eye to these facts? While still under the Republicans, the United States enacted a bipartisan sustainable chemistry law whose innovations they apply “to hundreds of supply chains, [als] critical to the American economy”.
We see new green chemical giants emerging there and serving markets that the old players are losing.
To focus on maintaining the status quo in Germany over the next few years would be fatal. And the open question is: How much energy should you put into it in the truest sense of the word?
Only optimized production processes should receive subsidies
State energy subsidies should only be considered if a production process has been demonstrably optimized with the latest computer-aided models. Qualified scientists only need a few months to carry out such an optimization.
A check for disruptive, greener processes even takes just a few weeks. We still have time to act. Let’s not gamble them away unused! Unconditional energy subsidies, without a goal in mind, will not help anyone. As a result, the long overdue modernization push in industry will be missed.
Technological developments in the world do not stand still, no matter how much we try to maintain the status quo. What if, for example, you no longer had to chemically synthesize many polymers industrially in energy-intensive processes, but could simply extract them from plants?
For many, this will sound like a dream of the future, but it has long since become a scientific and economic reality. The first start-ups in this area are preparing for their growth. The only thing that is in the stars is how they will get access to sufficient growth capital in Germany. Many scientific spin-offs have been struggling for years to gain access to capital in Germany in order to be able to build production facilities. Because venture capital companies shy away from investing in things they don’t understand – and unfortunately there are a lot of them in this country.
According to a study commissioned by the Association of the Chemical Industry, a total of only 2.4 million euros in risk capital was raised throughout Germany in 2018 invested in chemical start-ups. A clear market failure.
On the other hand, the EU’s share of the global chemical market fell from 33 to 17 percent in the last twenty years up to 2018. It is very reasonable to assume that there is a connection.
Germany’s chemical production is the largest in the EU. But how long?
In the USA, chemical start-ups sometimes receive hundreds of millions in state subsidies, such as the Phlow company recently, because they are believed to be able to make a significant contribution to sustainable supply security. Something like this would be unthinkable in Germany. It is better to support the old than to dare the new. It is well known that scientific findings hardly ever reach the market here.
Legacy industries rarely adopt them. She prefers things to stay the same. After all, taking risks and possibly failing has cost many a career in industry. That leads to caution.
Start-ups as innovation drivers have the potential to close this gap. But in Germany we still haven’t created a single instrument that counteracts the market failure described above.
The federal government has just announced in its start-up strategy that it is “examining” a module with which “young, innovative companies should receive financing that previously had no access to venture capital fund financing”. However, the outcome of this test is uncertain.
The chemical industry is the third largest in the country with annual sales of around 190 billion euros. After Japan, we are the third largest chemical nation in the world and, as the largest European producer, are responsible for almost 40 percent of chemical sales in the EU. But for how much longer?
Over a period of twenty years, European industry increased its investments by just seven percent to a total of 22.8 billion euros in 2018. During the same period, Chinese chemical companies increased their investments by more than 174 percent and US companies by 112 percent to 30.6 billion euros. In recent years, both company leaders and the state have failed to set the course to make the chemical-pharmaceutical industry in Germany fit for the future.
Unlike the automotive industry, we will not be able to wake up one day surprised to find that the value of a foreign company is greater than the value of all the industry sizes listed in the Dax combined. The omissions are too obvious for that.
More: In this way, the expensive gas is accelerating the green conversion of energy-intensive industry