Germany bets on lower energy prices, EU emissions reform to aid chemical industry
Clean Energy Wire
Germany has launched a "Chemicals Agenda 2045" to support its struggling chemical industry, which is grappling with high energy prices and the need to shift to climate-neutral production. The government said that measures to reduce industrial energy prices, as well as plans to push the EU to extend the Emissions Trading System for industry (EU ETS) beyond 2039, should help the key sector.
“The chemical industry is in crisis, perhaps the worst crisis since the post-war period,” said Markus Steilemann, president of the Chemical Industry Association (VCI) during a press conference. “The future of the chemical industry in Germany is under threat.”
Developed jointly by the economy and environment ministries, the VCI lobby group, as well as the chemicals, mining and energy union IG BCE, the agenda spells out short and long-term plans to “restore and secure” the competitiveness of the chemical industry through lower energy prices, climate-friendly production, innovation, and cutting red tape.
This includes proposals for an industry power price and reductions in the electricity tax, as well as a “carbon action plan” detailing the application of carbon capture and storage or use (CCS/CCU). The government is also pushing for reforms to the EU’s Emissions Trading System (ETS) to take pressure off the industry to move to clean production.
Industry representatives had called for the EU to slow down the scheduled tightening of EU emissions trading allowances, arguing that it would undermine the bloc’s competitiveness. Under the ETS, some emitters currently receive free emissions allowances to spare them from extra costs, but the EU plans to phase out free allowance allocations from 2026 (with free allocations ending by 2034) and completely cease to issue new allowances in the ETS by around 2039. The EU is set to review these plans in July.
Germany's chemical industry has faced mounting pressure since losing access to cheap Russian gas, a cornerstone of its industrial model, while also contending with weaker global demand. There is a broad consensus that the government must take rapid action to lower industry energy costs and clarify decarbonisation subsidies to provide long-term planning security. The government plans to hold high-level talks with industry representatives in May.