European Glass Industry Urges Immediate Action to Limit Energy Prices

As the energy crisis worsens in Europe, Glass Alliance Europe has urged the European Commission to provide immediate and impactful action to limit natural gas prices.

Glass Alliance Europe and other European officials from energy-intensive industries penned a joint letter on Sept. 6, 2022, to European Commission President Ursula von der Leyen stating that the volatility and extreme level of European gas prices has had severe consequences on the electricity market.

“For many energy-intensive industries, there is currently no business case to continue production in Europe nor visibility and certainty for investments and further developments,” the letter states. “The effects of those closures are also starting to have a severe impact on our value chains endangering the European industrial base and the availability of essential products more broadly.”

Glass Alliance Europe called for the European Union (E.U.) to introduce E.U.-wide measures aimed at limiting the price of natural gas and implementing measures designed to disconnect electricity prices from gas prices.

The increase in energy prices comes as the E.U. tries to weaken Russia’s energy leverage following its invasion of Ukraine. The result has been mixed as the E.U. has limited Russian gas imports, but it has seen gas prices peak at $333/MWh TTF, which is 15 times the pre-crisis level and 10 times more than U.S. prices.

The rise in European energy prices has forced E.U. ministers to meet this week to discuss emergency measures to ensure that member nations can weather the coming winter without further social and economic upheaval.

Additionally, the European Commission has recently asked countries to consider five immediate moves to bring costs down. These moves include a plan to redistribute energy producers’ windfall revenue to businesses and households, a price cap on Russian pipeline gas and mandatory targets for reducing electricity use during peak hours, among other possible steps. The moves look to level out costs and bring consistency to electricity prices throughout Europe.

At the moment, E.U. countries are spending billions to subsidize electricity bills. Germany recently announced that it plans to spend nearly $65 billion on a relief package. German Chancellor Olaf Scholz said he will also clamp down on energy providers who are reaping excessive profits. The income from those windfall taxes will then be used to reduce consumer prices for gas, oil and coal.

For now, the energy shortage is having a dire effect on the European glass industry. Glass Alliance Europe claims that many industrial plants have shut down or reduced production. The organization expects more plants to shut down in the coming weeks.

“These massive plant curtailments will increase Europe’s dependency on third markets for strategic supply chains and will drastically increase the global carbon emissions,” writes Glass Alliance Europe.