(Crazy) economy news

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Stefan Frank writes for AdG:


The energy crisis eats its way into the economy

Europe's energy crisis is drawing wider circles. On October 13th, Nyrstar, Europe's largest producer of fine zinc, announced that it would reduce production in its three European smelters by up to 50 percent in view of rising energy prices. "Significant increases in electricity prices in recent weeks and the cost burden of CO2 emissions in the electricity sector, which are passed on to industrial and household customers, make full utilization of the system no longer economically feasible," says a press release. Nyrstar explains that this is not because the company has shown too little ambition to reduce CO2 emissions:

"Nyrstar plants are fully electrified and the operations in the Netherlands and Belgium use electricity that is mostly generated from renewable energy sources, which means that they operate with very little or no CO2 emissions."

At the Nyrstar locations there are "also wind turbines and solar panels". Obviously, that was of little use. One day later, the global raw materials company and trader Glencore also cut zinc production in three of its European locations. Glencore justified the move with the sharp rise in electricity prices.

After the two announcements, the price of zinc on the commodity exchanges rose by more than 25 percent to a 14-year high. The Bloomberg news agency wrote of a "panic" in a market that had been "caught on the wrong foot". “China's electricity-related zinc supply problems were factored in. It wasn't Europe. "

The Economic Association Metals (WVMetalle) called on the European Commission to take "effective measures for energy-intensive industries":

"The currently high energy prices are a massive problem for the energy-intensive industry and also affect companies in the non-ferrous metal industry to a large extent."

The non-ferrous metal industry is in a "particularly precarious situation". “Energy prices and raw material supply bottlenecks, such as with magnesium, have the industry firmly in a stranglehold. Both of these have a significant impact on the raw materials market, ”says WVMetalle's managing director Franziska Erdle.

The wind power and solar industries are also affected

Eurometaux, the European association of the metal industry, warns in a letter to the EU commissioner for energy, Kadri Simson, that companies could move out of the EU due to the high electricity prices. The association also fears that "if electricity remains too expensive, it will weaken industrial electrification as a way of decarbonization and undermine the goals of the EU's Green Deal". Non-ferrous metals such as aluminum, copper, nickel, zinc and silicon are "at the front of the industries that are affected by the high electricity prices in Europe" because their production is more electricity-intensive than that of any other material, according to the association.

The recent price hikes for aluminum, copper and zinc are of a very different kind than those that were known from the past. Rising raw material prices are usually a sign of increasing demand in a robust economy. Raw material companies then react to this by increasing production. Then prices usually go down again, because the best remedy for high prices is high prices. Currently, however, the prices of copper wire or zinc bars are rising because the manufacturers can no longer operate the smelter profitably due to the high electricity prices. The price increases in mid-October were therefore not a symptom of rising demand, but a shrinking supply. Less is produced, and society as a whole becomes poorer as a result.

The industrial buyers of the metals are the first to notice this - but certainly not the last, because they will pass on rising prices to their customers. Ironically, this also affects the wind power and solar industries: Zinc, for example, is a protection against corrosion in wind power plants. The manufacturers of solar systems complain that modules are currently "expensive and hardly available" because the manufacturers, who usually come from China, are badly affected by the energy crisis. Industrial silicon, aluminum and soda - an important material for solar glass - have meanwhile "reached the highest price level in the past ten years", say industry circles.

The beginning of a food crisis?

Agriculture is also a very energy-intensive industry. Yara, one of the world's largest fertilizer manufacturers, has cut its production in Europe by 40 percent because of the high natural gas prices. Natural gas is the starting product in the manufacture of nitrogen fertilizers. Hydrogen is extracted from it, which then reacts with nitrogen from the air to form ammonia (Haber-Bosch process). At present, Yara can still import enough ammonia from its sites on other continents to Europe to keep fertilizer production going. But that cannot go on forever, warns CEO Svein Tore Holsether - in the end there may be hunger:

“It's important to get the message across that the current energy crisis could be the beginning of a food crisis. We must pay special attention to all those affected by higher utility and food prices, but for some it is a matter of survival. This is about scenarios of famine and food shortages. "

All over the world, farmers have to pay “significantly” higher prices for the nutrients they need because the production of fertilizers has become more expensive, according to Holsether. "That has immediate effects."

EU Agriculture Commissioner Janusz Wojciechowski confirms this: “Of course” there is a risk that rising energy prices will have an impact on food prices. According to Politico, the agriculture ministers of the 27 EU countries discussed a paper in early October in which the Polish government warns of “social unrest” as a result of rising natural gas prices.

Jais Valeur, the CEO of Danish Crown, the largest meat processing company in Europe, expects that the EU's climate policy will make beef a “luxury product like champagne” as it will never be “super climate friendly”. "It will be a luxury product that we treat ourselves to when we want to do something good for ourselves."


Von der Leyen: "Only dirty energies are more expensive"

Marie-Antoinette is credited with a statement that is supposed to show how removed she was from reality and the worries of the people: "If you have no bread, you should eat cake." She probably never said that. However, it is historically proven that Uschi von der Leyen, President of the European Commission, recently said that if natural gas becomes more and more expensive, wind and sun should be used instead:

"Energy prices are rising because the dirty energies coal, oil and gas in particular are becoming more expensive, while renewable energies, the clean ones, the good ones, have remained stable in prices and prices have fallen in recent years."

Von der Leyen intends to make her interpretation of the energy market the basis of EU policy. In an address given in English, she said that “renewables are the solution to rising electricity prices”. While “wholesale gas prices” “almost doubled compared to a year ago”, “the prices of renewable energies have remained constant. They have even fallen in recent years. ”That is why the“ European Green Deal ”is the solution:

“Every euro spent on renewables helps our planet and consumers alike. But it is also an investment in the resilience of our economies. That is why we have to accelerate our work on the European Green Deal in order to become more energy-independent. "

It is like a king who has ordered that tulips should be grown predominantly on the agricultural land of the kingdom. When the people then go hungry because there is a lack of grain, the king turns to the subjects and says: “The prices of grain have almost doubled compared to a year ago, while the prices of tulips keep falling. That is why we have to grow more tulips in order to become more independent of grain. ”Von Leyen's obsession with the idea that“ renewables ”should be expanded will do nothing but exacerbate the crisis. After all: In a tweet from October 22nd, Ursula von der Leyen wrote: "We also need a stable source, nuclear energy."

Perhaps the insight matures after all? In the UK, the government has announced the construction of new nuclear power plants in response to the energy crisis.

Coal is Germany's most important energy source

Governments in many countries around the world have underestimated the importance of reliable energy sources. Many have overestimated the ability of wind power and photovoltaics to deliver the electricity the world needs.

An example: Although it was beautifully sunny in Germany at 1 p.m. on October 18 and a lot of solar power was being produced, conventional power plants supplied two thirds of the electricity. The wind was largely out, once again the energetic energies could not be relied upon. This is not an outlier. As reported by the Federal Statistical Office (Destatis), electricity generation from conventional energy increased by 20.9 percent in the first half of 2021 compared to the same period in the previous year and accounted for 56.0 percent of total electricity generation.

“Due to the lack of wind in spring, the most important energy source was coal, after wind power had been the most important energy source in the first half of 2020. ... With an increase of 35.5%, the electricity from coal-fired power plants recorded the highest increase compared to the same period of the previous year. Coal thus made up 27.1% of the total amount of electricity fed into the grid. In contrast, the feed-in from renewable energies fell by 11.7%. In particular, the electricity feed-in from wind power, with a decline of 21.0%, was significantly lower than in the first half of 2020. As a result, the share of the total amount of electricity fed in fell from 29.1% to 22.1%. "

It takes revenge that, with the elimination of nuclear energy, Germany no longer has a balanced electricity mix to spread supply and price risks. An increase in the price of natural gas now leads directly to an increase in the price of electricity. In addition, high electricity consumption in summer (when the air conditioning is hot) leads to insufficiently filled gas stores before the heating season in autumn and winter.

China: superpower in wind power and solar energy

The People's Republic of China has a different kind of command economy than in the EU. At the end of September, the government ordered the country's electricity companies to buy enough coal "at any price" to avoid blackouts. When the coal futures on the Zhengzhou futures exchange constantly climbed to new highs, they intervened again and announced in mid-October that they wanted to take action against “speculators” and bring prices back to a “reasonable level”. In response, coal companies have publicly vowed to cut their prices. The prices on the futures exchange dropped by over 30 percent in four days - but will that mean there will be more coal? The experience of 4,000 years of state price controls speak against it. Price caps - whether for wheat, rent or coal - always lead to a shortage of supply. However, at the same time, China's state economic control agency, the National Development and Reform Commission, ordered that disused mines be restarted. Now there is a race against winter.

The People's Republic of China is the world's largest manufacturer of photovoltaic and wind power systems and the largest producer of the electricity obtained from them. From an August 2020 report in the journal Nature:

“China is the world's most capable producer of wind energy, with a capacity more than twice that of the second largest generator, the United States. It also has around a third of the world's solar capacity and installed more systems last year than any other country. "

According to the National Energy Agency, “10.8 ​​gigawatts of new wind power capacity” was added in China in the first half of 2021 (the reader can decide for himself how trustworthy data come from communists is). The Olympic Winter Games, which will take place in Beijing and Zhangjiakou from February 4th to 20th, 2022, have been declared a "green game" by the Chinese government. All sports facilities are to be operated with "green" energy. Local public transport in both cities should be 85 percent electric, with natural gas, with fuel cells or with hybrid drives. The People's Republic of China has also embarked on the path of “renewables”. “But, woe, woe, woe! When I look to the end “: Toyota, Apple, companies in the textile industry and also the manufacturers of cardboard boxes warn of delivery problems due to the Chinese energy crisis. Do similar strategies in Europe and China lead to similar consequences in the end?

Resistance from Africa

Meanwhile, resistance to climate colonialism is growing on the African continent. "Africa cannot sacrifice its future prosperity for the sake of Western climate goals," writes Uganda's President Yoweri K. Museveni in a guest article for the Wall Street Journal. "The continent should balance its energy mix, not rush straight towards renewables - even if that will probably frustrate some of those who meet next week at the climate conference in Glasgow."

South Africa's energy minister Gwede Mantashe also warns of a “hurry to use renewable energy sources” at the expense of coal. This could have "harmful consequences", as the power outages in China, India and Great Britain showed.

“If we swing from one extreme to the other like a pendulum, we will find ourselves in the same position. We have to have a clear program. We have to manage the transition carefully, in an organized way. "

As reported by the Bloomberg news agency, Mantashe decided not to take part in a meeting with the US, EU, UK, France and Germany climate emissaries at the end of September (but in which the South African Environment Minister took part) and instead gave the closing speech at the Limpopo Conference for mining investments. In his speech, Mantashe demanded that South Africa's mining industry should become more attractive for foreign investment and also cited the Mpumalanga coal region as an example. In Mpumalanga a not inconsiderable part of the coal is mined, which ensures that billions of people in countries like China, India, Pakistan, Vietnam, Sri Lanka and Bangladesh do not go out of light.

Around a billion people worldwide - most of them in Africa - have no electricity whatsoever. They sit in the dark at night or light up their huts with unhealthy and dangerous open fires, which can lead to chronic respiratory diseases, eye infections and severe burns. Meanwhile, the German climate protection activist Luisa Neubauer suggests that everyone should produce their own electricity. In an interview with a solar lobbyist, Neubauer said it was about

"That things are taken into their own hands, that you get started, that you use cooperative resources, that you generate your own energy, that you start with village communities and communities and solidarity communities to generate energy yourself, to initiate the climate change."

This “climate change” will be one “that enriches, strengthens people and societies, that not only protects the climate, but also brings with it a kind of prosperity or well-being.”

For Germany, she demands: "This legislative period has to be the most climate-friendly of all time, we don't know what a 1.5-degree government looks like, we will have to invent it, we will have to demand that for anything in the world."

So a 1.5 degree government wants to invent it so that we then have some kind of prosperity or prosperity. Aha. Why can't someone like Mr. Mantashe be Energy Minister in Germany or EU Commission President? That would be better than if people dominate the discourse who don't produce anything other than CO2 when they talk.



https://www.achgut.com/artikel/die_energiekrise_frisst_sich_in_die_wirtschaft