Major industrial energy users are calling on European leaders to pull out all the stops to do something about high energy prices. Factories are already shutting down, including in the Netherlands. If that takes longer, companies may leave Europe and investments in the energy transition will be at risk, write the umbrella organizations of eleven industry sectors.
This includes producers of paper, fertilizer and metal. All these sectors require a lot of gas or electricity to produce. Companies that work with variable energy contracts are therefore sensitive to fluctuations in energy prices. And so they are in dire straits now that prices have been at record highs for months.
Production is stopped
take Aldel, an aluminum smelter in Delfzijl. Production has been halted there since October. “It is unprecedented,” says financial director Eric Wildschut about the prices. “For corona, a megawatt hour cost 30 euros, now 400 euros. For a ton of aluminum you need 15 megawatt hours. That costs 6000 euros in electricity, while a ton of aluminum only yields 2500 euros.”
Passing on to the customer is not possible, because the electricity price is high, especially in Europe. This means that industries elsewhere in the world are not affected by the prices and can therefore produce more cheaply.
Russia
The electricity price is highly dependent on the gas price. Much electricity is generated in gas-fired power stations. “Half of the gas in Europe comes from Russia,” says Machiel Mulder, professor of energy economics at the University of Groningen. By the geopolitical tensions between Europe and Russia because of Ukraine, those deliveries have become more uncertain. “That is now the biggest source of high gas prices.”
Other reasons for the high prices include little wind, dense nuclear plants in France and a high price that companies have to pay for CO2 emissions.
The result is that production is not only at a standstill in Delfzijl. The eleven domes write that “numerous industrial energy consumers have curtailed their production, or have been temporarily closed.”
They ask European leaders to continue to invest in the energy transition and to adjust the trading system in CO2 rights, so that CO2 prices cannot rise so quickly and thus drive up energy costs.
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