Benjamin Moll should feel satisfaction when he reads the current reports from many German industrial groups. Moll is an economics professor at the “London School of Economics and Political Science” and in March he and his colleagues examined the possible effects of a Russian energy import ban on Germany. Result at that time: The effects on the economy would be hard, but manageable.
The authors had to take heavy criticism. Key industry figures stressed that companies could not substitute enough gas and might have to shut down production. At the beginning of April, BASF boss Martin Brudermüller warned that a ban on imports of oil and gas from Russia could “throw the German economy into its worst crisis since the end of the Second World War”.
“A completely absurd claim,” says Moll today, “that was partly tough lobbying.” In fact, companies are increasingly announcing that they want to save significant amounts of gas – or at least that they will be able to do so in an emergency. “The high gas prices create enormous pressure to adapt,” says Moll.
“It will definitely be expensive”
Companies sometimes take unusual paths: the Mainz-based special glass manufacturer Schott, for example, stocked up on propane gas to prevent the expensive melting furnace from being irreparably damaged in the event of a gas failure. Propane gas is not extracted from the earth, but is produced, among other things, at the oil refinery in Germany. In order to secure the necessary quantities from the limited supply and not to frighten the competition, Schott has, so to speak, secretly bought a corresponding supply over the past few weeks, stored it and successfully tested it. According to Schott, it has invested an additional double-digit million amount for this purpose. CEO Frank Heinricht sees the sum as insurance to protect against even greater damage.
For the chemical industry, which consumes much larger amounts of gas, switching to propane gas is not a solution. The market leader BASF, which alone requires almost 4 percent of the imported gas, is silent about how much gas it has already saved or is able to save in detail. In Schwarzheide, the second-largest production site in Germany, the group claims to be able to generate its entire electricity and steam requirements with heating oil. This is not possible in Ludwigshafen, where three gas-fired power plants supply production. CEO Brudermüller recently told investors that theoretically the group could also increase the oil content of the firing from the current 15 percent in Ludwigshafen. However, the group needs time to change the burner. But apparently there is always something going on at BASF: The Lehman crisis showed that, contrary to what was previously thought, the “steam crackers” – large chemical plants – could sometimes continue to be operated with a capacity of less than 40 percent.
The German car manufacturers are also trying to save gas. According to Mercedes-Benz, it already needs a tenth less gas. In an emergency, consumption can be halved, said Mercedes boss Ola Källenius at the end of July. The paint shop in the Sindelfingen plant can also do without gas if necessary.
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