VCI: Gas surcharge will affect German chemical industry

On August 15, local time, Germany announced that a surcharge on natural gas will be levied from October at a specific amount of 2.419 euro cents per kilowatt-hour, which will be adjusted every three months. In this regard, the German Chemical Industry Association (VCI) issued a document stating that the German government's temporary natural gas surcharge on natural gas consumers will damage the international competitiveness of the German chemical industry.

The VCI said the introduction of a natural gas surcharge would cost Germany'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. “Of all the models discussed, taxing is the best option from an economic point of view. But doing the right thing has side effects and is an extremely bitter pill for our already battered energy-intensive industries. ," Entrop said.

The VCI has warned 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 are particularly affected now need relief," Entrop stressed. The VCI advocates keeping the gas surcharge 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 a chemical feedstock each year, accounting for 27% of natural gas use, and the rest is used to produce steam and electricity.

As Germany's natural gas supply faces a crisis, the German government uses a natural gas surcharge to subsidize natural gas importers to help poor households cope with high gas prices. Meanwhile, wholesale gas prices in Germany remain at very high levels due to recent supply cuts from Russia, Germany's Federal Network Agency said in a new report. Businesses and private consumers must expect a sharp increase in natural gas prices, the report said. Analysts have warned that the European petrochemical industry, especially in Germany, could be forced to cut or stop production this winter if Russia continues to cut gas supplies.

At present, the natural gas inventory in Germany is 70.39% of the total inventory capacity.