Businesses start the year under great stress. The recovery is damaged by the continuation of the health crisis and the explosion of costs. Their representatives confide to “Trends-Tendances” their anxieties and their calls for action concerning their energy bills.
The inflationary surge is mainly due to the explosion in gas and electricity prices. “These two items of expenditure will constitute 3.2 points of inflation at the start of the year”, underlines the Planning Office. “European industry will not survive with such high energy prices”, warned, on RTL-TVI, Loïk Le Floch-Prigent, former Gaz de France boss. It is more than a ticking time bomb: a major problem for Europe, both in the short term and in the long term.
The inflationary surge is mainly due to the explosion in gas and electricity prices. “These two items of expenditure will constitute 3.2 points of inflation at the start of the year”, underlines the Planning Office. “European industry will not survive with such high energy prices”, warned, on RTL-TVI, Loïk Le Floch-Prigent, former Gaz de France boss. It is more than a ticking time bomb: a major problem for Europe, both in the short term and in the long term. “Some companies have already closed production lines because of these energy costs”, stresses Peter Claes, director of Febeliec, the federation which represents the vast majority of industries that consume large amounts of energy and gas, and of Ifiec, its European counterpart. Large producers of ammonia and fertilizers in Europe have already drastically reduced their activity, as have producers of zinc, non-ferrous or steel. Not all companies communicate on this subject. But the worst is yet to come: as with households, companies often have fixed-price contracts that had to be renewed at the end of the year. We await the recovery with some anguish.” “With the increase in the energy bill, companies are wondering if they will close lines in 2022, confirms Olivier de Wasseige. For others, it’s no better. Many companies had a good 2021, but their bottom line is going to be weighed down by energy costs. This also affects the cost of components. The impact is colossal: it reduces investment capacity, it slows down job creation, it can even generate liquidity problems and force people to borrow to pay for energy.” Of all the factors weighing on the European recovery , the explosion in the prices of gas and electricity is the most worrying.”Unlike the oil crisis in the 1970s?1980s which was global, this is a local crisis which exclusively affects Europe and part of Asia, explains Peter Claes. In the case of the oil crisis, the impact on competitiveness was limited because it affected all companies in the same way. The impact will be, this time, dramatic for the industry of our countries, especially for those which are active on the international market.” Uncertainties on the energy mix The major problem, it is the explosion of the price of gas. However, this is linked to geopolitical tensions with Russia.” For Russian President Vladimir Putin, gas has become a political instrument in order to deprive Ukraine of gas and force the opening of North Stream 2 across Europe, explains Peter Claes. What can we do? It’s hard to say. The political world must ease these tensions and expand our sources of supply. That said, action can be taken by working on tariffs and temporarily or permanently reducing the additional costs for gas or electricity. It is a decision that the Belgian political world can take. Transmission or distribution tariffs could also be temporarily reduced: Fluxys and Elia have surpluses which could be used at the request of the federal government. A final element is the impact of the cost of CO2 at the level of electricity: we could act at European level to rebalance this market. model, analysis Caroline Cleppert (UCM). We should have been talking about it for more than 30 years, but suddenly we feel we have to step up the pace. For the moment, there is no peaceful and informed debate on this question, even though it is crucial. For our self-employed and SMEs, agreeing to change course is a concern, especially since there is no clear vision. The transition of an activity, beyond the conviction that the model must be changed, represents significant investments with a very different profitability horizon that requires public intervention. Going from stored fossil energy to energy in flux is no small feat. All of this in a climate of distrust. “Uncertainty about the country’s future energy mix, the non-decision on the total shutdown of nuclear power and political tensions do not contribute to serenity. “Three things are fundamental in the eyes of our members, emphasizes Luc Sterckx, president of Febeliec and former boss of Luminus. First, we want to finally have competitive prices. Year after year, the Deloitte studies commissioned by us show that prices in Belgium significantly exceed those in neighboring countries. The introduction of the energy standard in the law is a step forward, but we are waiting to know how this will materialize. Secondly, the investments of our companies – in chemicals, petrochemicals or pharmaceuticals – are made for the long term. It requires predictability, which we don’t have. Finally, we also need price stability, which requires not being too fair in terms of supply. However, the risk is real.” The energy transition, he confides, is “a revolution for our chemical and petrochemical industries”. “The project is very ambitious, all right, but we always wonder how we can materialize, adds Luc Sterckx. Everyone works there. The stakes are vital to remain competitive vis-à-vis China and the United States. Today, gas prices range from a ratio of 1 to 10 between Europe and the United States: if this continues, it will be a disaster.”