BASF Signals Politics, Not Money or Technology, Hindering a Clean up

BASF has an 8 million-ton CO2 problem at its flagship chemical complex in Ludwigshafen, yet politics is currently eclipsing money and technology as the German company looks for a solution.

Keen to wean its steam cracker off of fossil fuels, the world’s largest chemical company and RWE outlined a proposal to build a 2 gigawatt offshore wind farm to enable the electrification of Ludswigshafen via CO2-free hydrogen. The technology for the 4 billion-euro project is already there. Nor is money an issue given investor appetite for anything with a green hue. What’s lacking is a suitable regulatory framework, Chief Executive Officer Martin Brudermueller said.

BASF’s shopping list for policymakers in order to go ahead include project tenders for offshore energy sites for use before 2030, and no surcharges on green energy. While they are at it, BASF would also like a regulatory framework for CO2-free hydrogen production: the company uses a million tons of it a year, globally.

For a CEO with a reputation of being hands-on, similar to ex-CEO Juergen Hambrecht, Brudermueller cuts an increasingly impatient figure as Brussels and Berlin fail to keep pace. Without sufficient supplies of renewable energy, the chemical industry’s transformation won’t be possible, undermining Europe’s Green Deal, he said. Legislators are getting bogged down in the detail rather than establishing a workable electricity pricing.

source: BASF

The global chemical industry could face a similar financial and technology shock that automakers felt as pressure suddenly mounted to phase out the combustion engine. The huge investment needed to develop new electric vehicle models with better range and quicker brought bitter rivals together in partnerships. That’s already resonating with some in the chemical industry, among the biggest energy users out there. BASF is working with SABIC and Linde on the electrification of the cracker project.

“It’s time for politicians to abandon their high flying ambitions and finally get to work to bring these targets and ambitious ideas to ground-level reality,” he said. “We want to finally see a shift from talk to action.”

BASF’s strategy of running large complex sites making basic chemicals all the way to more refined specialty coatings and food ingredients means Brudermueller needs big solutions. By his own admission, the company has gone about as far as it can to maximum fossil-fuel use efficiently. Assets can’t easily be unpicked and sold in the way less diversified companies are overhauling their portfolios to cut CO2 emissions. BASF is left with crackers that need vast quantities of gas to heat steam crackers that 24/7 split feedstock like naphtha into separate chemicals.

“We’ve harvested all the low-hanging fruit, so with the fossil-based process we cannot go much further,” Brudermueller said.

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