Sector News

German carbon pricing plan may cost DAX companies billions: report

September 19, 2019
Energy & Chemical Value Chain

Germany’s blue-chip companies could face billions of euros in costs to cut carbon emissions under a climate protection plan due to be unveiled by the government on Friday, according to a study by asset manager Union Investment.

“According to our research, almost every one of the (30) DAX companies will be facing big challenges, even under low CO2 price scenarios,” said Henrik Pontzen, head of environmental, social and corporate governance at Frankfurt-based Union Investment’s portfolio management business.

Germany, which is responsible for just over 2% of the world’s greenhouse gases emissions, mainly aims to cap carbon emissions from buildings and transport.

Its utility sector has already made substantial reductions, forced by mandatory carbon permit trading (EU-ETS) in Europe that incentivises carbon efficiency.

But the country is on still track to miss targets to cut greenhouse gases emissions, of which CO2 is the main one, by 55% in 2030 from 1990 levels, having achieved less than 30% so far.

Union Investment said that putting a carbon price on areas not captured by the ETS could cost the DAX group of companies 5.2 billion euros ($5.7 billion) a year, an estimate it based on a price of 30 euros a tonne of CO2 equivalent.

This sum would be equivalent to 3.7% of the cumulative operating profit of the combined DAX group in 2018, it said.

It said possibly heavily affected companies included chemicals firms BASF, Covestro and Linde; steelmaker ThyssenKrupp; automotive companies BMW, Continental, Daimler, and Volkswagen; and building materials firm HeidelbergCement.

Berlin appears likely to set up a separate CO2 trading system for lagging sectors before integrating them into the ETS, while there are also proposals to impose CO2 taxes on them.

The C02 contract for December expiry on the ETS, which covers half of all polluting industries in the EU, is currently trading at 25.5 euros a tonne CFI2Zc1.

Pontzen said financial services and telecoms companies such as Allianz and Deutsche Boerse would be able to react quickly because they could replace their electricity needs with purely renewable energy-derived power.

“It will be decisive in the medium and long run, how fast companies can adjust their energy supply, modify business models and to what degree they can pass on additional costs to consumers,” he said.

By Vera Eckert

Source: Reuters

comments closed

Related News

May 26, 2024

Borealis signs first Austrian wind and solar PPA with Burgenland Energie

Energy & Chemical Value Chain

Borealis has partnered with Austria-based wind and solar power producer and green tech solution provider Burgenland Energie on a power purchase agreement (PPA). Under the ten-year agreement, renewable electricity will be provided by a hybrid renewable energy park located in Nickelsdorf, Austria, which is owned by Burgenland Energie’s subsidiaries Nick Alpha and Wind PV Operation.

May 26, 2024

DuPont to split into three companies

Energy & Chemical Value Chain

DuPont de Nemours Inc. announced plans to split into three separate, publicly traded companies. The electronic materials and water business will become independent companies, with the remainder of the company to comprise New DuPont. The splits will be complete within 18 to 24 months, and do not require shareholder approval.

May 26, 2024

Olin hires new leader for chlor-alkali and vinyls business

Energy & Chemical Value Chain

Olin Corp. has hired Deon Carter as vice president and president/chlor-alkali products and vinyls, effective June 17. Carter was previously COO at Continental Industries Group, a position he took April 2023 after serving as president and CEO of Scientific Design Company.

How can we help you?

We're easy to reach