Page 9 - ITAtube Journal 2 2022

The European industry nowadays depends largely on imported LNG. Despite signifi- cant price reductions since January 2023, the present price of LNG of about 15 USD/ MMBtu (Figure 2) is still about 12 USD ore 5-times more expensive than natural gas. Similar effect can be reported from the electrical energy price, which in Europe
is about 2-times higher than before the Ukraine war and about 2 - 3 times higher than electrical energy costs in the US or China (Figure 3). Germany, presently having the highest prices for electrical energy has just these days decided to reduce the rel- evant taxation to the European minimum, which results in a cost reduction of about -15 €/MWh.
Europe has established the ETS (Emission Trading System), to reduce CO2 emis-
sion by introducing levies on each tonne
of emitted CO2. In addition, the CBAM (Carbon Border Adjustment Mechanism), was introduced as compensating levies on CO2 intensive goods imported from third countries outside of Europe. This system, characterised by punitive tariffs, ensures a certain equalisation of costs within Europe. However, as it raises the overall cost level for goods in Europe, it is leading to cost dis- advantages for products that are exported outside of Europe.
In contrast, the USA has introduced an instrument with the introduction of the IRA (Inflation Reduction Act), which provides financial incentives for low-carbon invest- ments. A climate protection package of 369 billion US dollars is providing tax credits for climate saving investments. The US IRA has created a boost of investments, whereas the European levies system did create irritations amongst investors and economic recession.
Therefore, the European energy intensive industry is confronted by a significant cost disadvantage. If no cheaper energy supply sources become available, this disadvan- tage remain as a major thread for the Euro- pean energy intensive steel and tubular industry.
ITAtube Journal December 2023
Figure 1: Natural Gas price development 1 year up to 6th of December 2023 (USD/MMBtu)
Source: Trading Economics.com
Market information
Figure 2: LNG Global Price development 1 year up to Oktober 2023 Source: International Monetary Fund, US Bureau of Labor Statistics
Figure 3: Selected cost of electrical energy as per Oktober 2023 in €/MMh Source: Statista.com
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