How Germany’s industrial giants are preparing for winter


BERLIN, Sept 27 (Reuters) – Germany has managed to fill its gas reserves to 91.32% of capacity, allaying fears it could run out this winter after Russian gas flows plummeted to the aftermath of European sanctions following the invasion of Ukraine – but it came at a price.

One in ten medium-sized companies, which provide almost two-thirds of German jobs, have reduced or stopped production due to high gas prices, according to a September survey of almost 600 medium-sized companies by the association professional BDI, reducing demand.

Some industrial giants, especially gas-intensive industries like chemicals, have started to shift production and supply elsewhere, while others are switching from gas to coal or oil – posing problems for their carbon footprints. .

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Below is an overview of the measures that some of Germany’s largest industrial companies have taken to reduce their gas consumption in anticipation of winter, and who are awaiting more information on government measures before reducing their consumption further.

Companies are listed in alphabetical order.

BASF (BASFn.DE)

The world’s largest chemical company has cut production of ammonia, a nitrogen fertilizer and input for engineering plastics and diesel exhaust fluid that relies heavily on natural gas.

It now partly sources its ammonia from outside Europe, where prices are lower, a spokesman said. Read more

BMW (BMWG.DE)

BMW consumes about 3,500 gigawatt hours (GWh) of energy per year in Germany and Austria, three-quarters of which comes from natural gas.

The automaker can cut its gas mileage by at least 15% from a year ago, the company’s chief financial officer said Monday.

CEO Oliver Zipse said in August that he could replace about 500 GWh of electricity from gas-fired combined heat and power plants by buying power elsewhere, but that would significantly increase his costs.

A spokesperson said the automaker is still evaluating this measure. In the meantime, it had turned off the outdoor lighting in some of its buildings and advertising spaces.

CONTINENTAL (CONG.DE)

The automotive supplier has been working since August to reduce its consumption of natural gas by 20% to replace it with oil, electricity or liquefied gas, he said on Tuesday.

It was also spreading purchases across multiple sources and increasing inventory, he said. Read more

COVESTRO

Covestro, a chemical group that makes products such as chemical foams used in mattresses, car seats and building insulation, uses natural gas both as a raw material for its production and as an energy source.

Replacing gas as a feedstock was not yet possible, and options to replace it as an energy source were also limited, a spokesperson said, although the company is testing where it could replace fuel with oil.

Yet it has yet to shift production outside of Europe or change its future investment plans in the wake of the energy crisis.

“Of course, there will come a time when we have to ask ourselves if this still makes financial sense,” the spokesperson added. Read more

DAIMLER TRUCK

Daimler Truck’s managing director said in a recent interview with German newspaper FAZ that the company wanted to switch from fueling its power and thermal power stations with gas to using oil, but was caught up in bureaucracy and could pass only from October.

It has already implemented some measures to reduce absolute energy consumption, including replacing its light bulbs with LED lamps and reducing the temperature in offices and production halls by two degrees Celsius during the winter, said a spokesperson told Reuters.

HEIDELBERG MATERIALS (HEIG.DE)

Heidelberg Materials, formerly HeidelbergCement, announced in July that it was developing contingency plans to switch to alternative energy sources, including oil.

It was mainly affected by rising electricity prices rather than gas, the CEO said at the time, with its energy bill 60% higher than last year in the first half of 2022.

LINDIA

The world’s largest industrial gas company said in July that it produced medically or process-safety critical gases and therefore believed it would be prioritized for the German government’s gas allocation. Read more

A spokesperson declined to provide further information, saying an update would be provided later in October in line with third-quarter results.

MERCEDES-BENZ (MBGn.DE)

The luxury carmaker said in July it cut its gas mileage by 10% and hasn’t made any further cuts since then, according to its chief production officer in late September.

The 10% reductions were achieved by supplying combined heat and power plants with electricity rather than gas, as well as reducing heating in work halls.

Mercedes is investing in renewable energy capacity, building a wind farm in northern Germany, but this will not come on stream until 2025 and is a long way from its factories in the south, where there are fewer wind.

There, the automaker plans to install solar panels on more of its roofs – but even at Sindelfingen, its most modern plant, solar can only cover 30% of its energy needs.

THYSSENKRUPP (TKAG.DE)

Thyssenkrupp Steel Europe has partially cut production in Germany due to hesitant customer behavior that the company sees as signs of a recession, a spokesperson said. Read more

It has also relocated part of its production to Germany at its Duisburg site, where it is able to produce its own electricity from the steam generated by the gas from its furnaces and factories.

“We are implementing many measures that we would not normally apply, but which are now necessary to save gas and electricity,” the spokesperson said.

VOLKSWAGEN (VOWG_p.DE)

Europe’s biggest carmaker said at a briefing last Thursday that it had cut its gas consumption by 20% by replacing fuel with coal and oil.

The company has contingency plans in case its suppliers are forced to halt production, including stockpiling components everywhere from warehouses to ships and trains.

It has 6,000 suppliers in parts of Europe particularly vulnerable to gas shortages, executives told a briefing, and was looking at alternative sources of supply in the medium term.

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Reporting by Victoria Waldersee; Editing by Alexandra Hudson

Our standards: The Thomson Reuters Trust Principles.

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