Germany Imposes a Natural Gas Surcharge, and the Chemical Industry Loses More than 3 Billion Euros a Year!

In response to the impact of the continued surge in prices, Germany announced a natural gas surcharge from October. The move will cost Germany's chemical and pharmaceutical industry more than 3 billion euros a year, pushing many producers to the brink of collapse.

On August 15, local time, Germany announced that it will start to collect natural gas surcharges in October. The specific amount is 2.419 euro cents per kilowatt-hour, and it can be adjusted every three months.

The German Chemical Industry Association (VCI) said on the same day that it is estimated that the introduction of natural gas surcharges will cost the country's chemical and pharmaceutical industry more than 3 billion euros a year.

VCI Director General Wolfgang Gross Entrup said that while the chemical industry recognized the need for the tax, it was concerned about its impact.

“One thing is clear: of all the models discussed, taxing is the best (option) from an economic point of view. But doing the right thing has side effects: for our already hard-hit energy-intensive industries, It's an extremely bitter pill," Entrop said.

The VCI warns that many companies are on the brink of collapse due to the multiple burdens of high gas and electricity prices, as well as expensive raw material costs.

"We must not compromise the economic performance of companies. Companies that have been particularly affected need relief now," Entrop stressed.

Natural gas consumers will have to pay the tax from October 1, 2022, until April 1, 2024. The VCI is in "in-depth dialogue" with the federal government on such relief.

The VCI advocates keeping gas surcharges as low as possible through state subsidies. In addition, the collection period should be extended as long as possible to avoid short-term overburdening of the industry and consumers.

According to VCI data, the chemical industry accounts for about 15% of Germany's natural gas consumption, using about 2.8 million tons of natural gas as chemical feedstock every year, and 99.3TWh of natural gas for steam and electricity production, accounting for 27% and 73% of the industry's natural gas use, respectively. %.

It is understood that due to the crisis of natural gas supply in Germany, suppliers have to buy natural gas from other places at higher prices to make up for the lack of supply. The surcharge can cover about 90% of the price difference, and in this way, suppliers can avoid bankruptcy, etc. as a result of.

The German Energy-Intensive Industries Association issued a statement on the 15th saying that companies in six energy-intensive industries including steel, chemicals and paper must deal with a total of about 5.3 billion euros in new energy costs each year. An average of almost 6,300 euros of additional burden is added to each job position.