Dialogue event

BASF SE in Times of the Energy Transition - A Company on the Path to Sustainability?

09 Feb 2021

In a discussion event as part of the Dialogue on the Economics of Climate Change, Dr. Martin Brudermüller, Chairman of the Board of Executive Directors of BASF SE, and ZEW President Prof. Achim Wambach, PhD, discussed the sustainability strategy of the BASF Group on 09 February 2021.

Brudermüller began his presentation by saying that in 2018, in addition to the financial goals of growth, profitability, earnings and dividends, BASF had included two non-monetary goals in its corporate strategy. The first is a higher sales rate of so-called "accelerator products", which contribute significantly to the sustainable development of the company. The other is the goal of continuing to grow by 2030 while reducing emissions by 30 percent, explained BASF's CEO.

In addition, the European Green Deal provides a roadmap for more sustainability: the EU wants to achieve the goal of climate neutrality by 2050. For this to succeed, all European economic sectors must make an active contribution. "The European Green Deal is a project of the century and the most comprehensive sustainability programme in history. But, how do we tackle this goal?" asked Brudermüller. The challenges for the chemical industry are immense: to become climate-neutral, to obtain energy from renewable sources such as wind or sun, to master digitalisation and to change chemicals and production processes in such a way that no or only significantly lower CO2 emissions are produced. "At the same time, however, BASF must remain profitable. This makes decarbonisation of the chemical industry a multidimensional challenge," says the BASF Chairman.

BASF's strategies for reducing emissions

In the chemical sector, energy use and the conversion of the so-called "steam crackers" – a basic process in the industry where many value chains start – are the best ways to reduce CO2 emissions. "To manage the carbon budget, BASF has launched two programmes: a research and development (R&D) programme and an investment programme," Brudermüller explained to the approximately 310 viewers of the livestream. The R&D programme would further develop e-crackers or methane pyrolysis, while the investment programme would open up new ways of renewable energy production. In addition, the company wants to enter into an even stronger dialogue with its customers: In future, for example, transparent insight would be provided into the emissions released by BASF's products and how the CO2 footprint could be further reduced, Brudermüller noted.

The demand for energy in Germany will increase significantly in the coming years. If CO2 emissions are to be reduced at the same time, this higher energy demand will have to be covered primarily by renewable energies. The increased demand for energy will be caused by progressive electrification, for example in the area of e-mobility.  The provision of energy and the price of electricity are thus of considerable importance. "The problem is that Germany currently has some of the highest electricity prices in the world. The high price does not come from generation, but is tripled by the electricity tax, EEG levy and grid fees. The EEG levy in particular has done its duty," Brudermüller sums up. It proved to be useful for the initial promotion of renewable energy, but is now increasingly becoming a brake on innovation that prevents transformation processes. Therefore, a reform of the regulation of electricity costs is absolutely necessary. However, this was a political question that the industry could not answer on its own, said the BASF Chairman.

Sustainability goals: Politics and industry must work together

"The next step is for industry and politics to work together more closely. Industry brings the technologies with which more sustainability can be realised. Politics, in turn, should provide a framework that does not penalise but incentivises and promotes these technologies," said Brudermüller, adding: "Only if this succeeds do we have a chance in Europe to shape things together in a way that preserves the economic efficiency and competitiveness of companies."

ZEW President Wambach and the BASF Chairman then discussed various sustainability issues. Achim Wambach wanted to know what significance the CO2 price had for the chemical industry. CO2 prices have their justification, said Brudermüller. For the chemical industry, however, it is important that these are calculable in the long term and also realistic in terms of implementation. "Otherwise, there will be distortions of competition because investments will be relocated. Politics and industry must develop a clear line for the next 20 years. Then the transformation will also pay off," said Brudermüller.

Other topics of discussion were the CO2 border tax, which is to protect the European economy on the way to climate neutrality, green hydrogen, upcoming innovations of BASF as well as EU support programmes for batteries. Finally, the ZEW President addressed whether the largest chemical company by sales is on the right path to sustainability? "We need a new kind of cooperation in Europe. Dreaming about sustainability is not enough, we need realistic framework conditions and concrete actions. Politics must not only punish, but create incentives for European companies. Otherwise, there is a danger that countries like China or the USA will overtake us," Brudermüller concluded.