High energy prices and gas shortages threaten supply: Copper industry expects production cutbacks /Expansion of renewable energy at risk
2.419 cents per kilowatt hour (kWh) more will be charged to household customers and companies from October 1. Correspondingly high costs will also be incurred by the German copper industry as a result of the gas levy. The substantial energy price increases for companies compared with the previous year have already led to enormous additional costs, which will now be increased by an additional levy. The gas levy also creates a fundamental competitive disadvantage that fundamentally calls into question the German copper industry and the domestic production of products that are essential for the energy and mobility turnaround.
Alexander Dehnelt, Chairman of the Board of the Copper Association, commented: “Copper production is already threatened by the restricted gas supply; the new gas levy will impose a new package on it.” In principle, Dehnelt continues, the company agrees with a measure that safeguards Germany’s supply. “On the international market, however, the gas surcharge leads to an imbalance or a distortion of competition, which again has a negative impact on the German copper industry.”
Copper industry is important pillar of the German economy
In 2021, the German copper industry employed over 15,000 employees* in about 60 companies and generated sales of close to 20 billion euros.
Its products go into applications for the transmission and generation of electricity and heat and are indispensable for renewable energies, e-mobility and energy efficiency improvements in the operation of buildings.
If copper production has to be cut back due to the current pressures, the expansion of renewable energies will also be slowed down.
Expansion of renewable energy depends on copper
Michael Sander, Managing Director of the Copper Association, commented: “The German semi-finished copper industry achieved a production minus of 6 percent in the 2nd quarter of 2022. This is despite the fact that more copper would actually be needed for the expansion of renewable energies – a trend that threatens to continue in the coming months.”
The change to decarbonization and gas alternatives of German industry would also be additionally slowed down by this levy in already difficult times, as the investments required for this would thus be increasingly difficult to finance and calculate.
“Politicians have obviously moved away from their claim that an energy and mobility turnaround can create or at least maintain jobs and economic growth in Germany,” Sander said.
Serious economic consequences
More than 50 percent of all products made of copper and copper alloys alone go to the electrical engineering and electronics industry, including the cable industry and information technology and telecommunications. In energy cables, copper wire accounts for about 70 percent, all important components in the expansion of renewable energy.
“We cannot emphasize often enough the systemically important function of the copper industry, especially for decarbonization and the implementation of the European Green Deal,” Dehnelt said, summarizing the situation. “Now, because of the world situation, we no longer have to deal only with gas and raw material shortages, but also with even higher energy costs. This is now about the existential threat to an industry and therefore also to jobs. We wonder whether the seriousness of the situation is being recognized in Berlin. For the German economy, the industrial base must be preserved, especially in key technologies and industries, so as not to make us even more dependent on third countries.”