Recession could hamper chemical industry's green transition – analyst
The energy crisis and economic slowdown in Germany could hinder the green transition in the country’s chemical industry, particularly among medium-sized companies, business daily Handelsblatt writes. While the newspaper’s recent survey indicates chemical companies are sticking to their plans for a green transition, Baader Bank analyst Markus Mayer says they could slow down in the face of recession. "Companies will keep their strength together and postpone projects in order to remain liquid," Mayer stated, noting that “in many places the mood is as low as it was in 2008 during the financial crisis". Smaller companies in particular are expected to face difficulties. "For German SMEs, especially in the energy-intensive sectors, adapting to a new energy world will be a major challenge that will cause some companies to fail," Deutsche Bank stated in a recent study.
Industry leader BASF says nothing has changed in its global climate goals. Plastics manufacturer Covestro and the specialty chemicals group Lanxess are also sticking to their goals. However, a recent survey by consulting firm KPMG of 1,325 CEOs worldwide found that 50 percent were pausing their existing or planned environmental, social and governance (ESG) efforts in the next six months due to economic uncertainty.
Many chemical companies have set ambitious goals for achieving climate neutrality by converting to renewable electricity and replacing fossil raw materials, such as oil and gas, with products recovered from waste and biological raw materials with the aim to create a circular economy. The German Chemicals Industry Association (VCI) estimates the basic chemicals sector would have to invest some 45 billion euros to achieve greenhouse gas neutrality by 2050.