How the chemical industry could respond to a Russian feedstock ban

How the chemical industry could respond to a Russian feedstock ban

The good news for European industry is that stopping Russian gas imports will not be fatal.

For example, Germany’s economy is the manufacturing base that has become most dependent on fossil fuel imports from the past. Still a research team led by Rudigar Bachman of the University of Notre Damefound that the impact of the ban on Russian energy imports would be “substantial but manageable”.

Specifically, the Economist modeled how business and government would respond and predicted that German GDP would shrink by between 0.5% and 3%. The depth of the impact varies across models based on how quickly the industry responded Alternative power and raw material sourcing,

This hit to the German economy due to the COVID pandemic is minimal, although some sectors, such as those around local economies industrial chemical complexes It will hurt a lot.

How will the chemical industry react to sanctions on Russian gas?

Fortunately, there are many ways in which chemical industry And the Russian government can adjust to survive without fossil fuels.

European businesses have had to handle trade restrictions and sanctions before, and have always found a way to remain calm and continue production.

For example, during WWI when the Royal Navy blocked imports into Germany from the rest of the world, BASF engineers devised new technology. chemical process For making nitric acid without ammonia, new one chemical facility was made for production of nitric acid Required for manufacturing without explosives ammonia Import.

During this current threat, policies across Europe can be adapted to help companies and the wider public. chemical industry Adjust to life beyond Russian gas, coal and oil. And when making changes, governments may do some or all of the following:

Offer incentives for using the option: Tax breaks and subsidies may be offered to companies that use, invest in, or supply fossil fuel alternatives,

Stop bailout for current high fuel bills: Offering to ease the burden that companies and individuals are facing from rapidly rising energy bills may seem helpful. However, in the medium term, this policy delays and sustains the industry and households to take action. european chemical industry Russia is dependent on fossil fuels.

Investing in Energy Infrastructure: Governments should aid and encourage the development of national power grids to facilitate the import and transfer of energy from friendly nations. This investment could include building an LNG terminal to help with improved power links for wind farms, better cross-border support, or imports from the U.S. or the Middle East.

· Act quickly: The sanctions now in force on Russian oil and gas (during the summer months) allow Suppliers and Industrial Consumers To prepare ourselves for possible shortages when winter arrives.

Creating and promoting unfair prices for fossil fuels: Whereas in the short and medium term, high-energy prices limit Industrial Production And domestic prosperity, in the long term, encourages the transition to renewable/domestically produced energy. Policies may include, for example, a tax on an imported fossil fuel or High tariff on feedstock received from Russia.

What can European chemical producers do to adjust more quickly?

would be hard to find as better efficiency European Industrial Chemical Production Over the years the focus has been on reducing waste/reducing costs.

Consequently, for example, chemical compound Ludwigshafen in Germany (like others around the world) already has highly effective reuse and recycle programs. such that the managers of Europe’s biggest managers chemical production Complex can claim that as much as 94% chemicals that the import of the plant ceases to be a chemical products,

Behaviors that chemical producers should avoid

chemical industry One must also be careful not to act against one’s own interest as was the case during the recent pandemic-induced global semiconductor shortage. supply chain disruption,

With the diverse demand for computer chips from manufacturers of cars, home appliances, laptops, phones and gaming machines, there was a level of fear among people. the supply chain because of which Stock and raw material hoarding by some players in supply chain,

as Sustainlytics. Susan Meier, Senior Analyst Notes, such behavior sends, “… to the deceptive demand signal upstream the supply chainTo encourage aggressive capacity investment. However, since it takes many years to build up semiconductor production capacity, we will see a greater supply of chips in the next few years, which will not only lead to price fluctuations, but also social waste in the long run.

The war between Ukraine and Russia could cause a further negative reaction among semi-conductor manufacturers, because, as forbes magazine notes, “[Russia] Supplies “35% of America’s palladium, a rare metal used to make semiconductors.”

Given the equally diverse and diverse nature global chemical industry (And its interconnected supply chain, Raw material hoarding and price hike There’s a real possibility this winter.

There are clearly many traps and pitfalls for european chemical industry To avoid in the coming months. but also likely to adopt policies and business practices that will produce A more independent, green and well-organized chemical industry,

The Russian invasion of Ukraine, the destruction of industry, the loss of businesses, homes and lives is nothing short of tragic. However, if politicians and chemical industry Chiefs act wisely, at least, that could be a silver lining.

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