Industrial electricity prices and subsidies for new plants: Roadmap to carbon neutrality needs political drive

Electrification is considered the technically feasible ideal solution – but also the most expensive. What support would small and medium-sized enterprises need to receive in order to prevent investments from being slowed down?

Elke Radtke: Due to the high cost of electricity, measures to switch from fossil fuels to electricity are currently not cost-effective. For example, the coke-fired, continuously operating hot blast cupola furnaces used in large-scale foundries are extremely efficient and economical. Such a cupola furnace would have to be replaced by several electrically powered induction crucible furnaces in order to achieve the same melting capacity. The costs of new installation and electrical energy would make the cast products significantly more expensive to manufacture – but the additional costs cannot be passed on to the customer. It would therefore make sense to set up a subsidy for process heat generation systems that covers investment costs (CAPEX) and operating expenses (OPEX). These – possibly temporary – transformation subsidies could actually drive planning and implementation.

Politicians are increasingly focusing on hydrogen. The Hydrogen Acceleration Act brings relief. Is this a good prospect for foundries?

Christian Schimansky: In the long term, hydrogen can indeed be just that as a substitute for natural gas: a good prospect. However, there is still a lot of research and infrastructure development ahead of us before we get there. The need for research stems from the fact that, for example, it is not yet sufficiently clear how hydrogen affects the metallic materials and refractory materials in the melting plants. In addition, foundries are located far away from the planned hydrogen core network. For this reason, decentralised electrolysers could be an interesting option in the medium and long term, generating hydrogen from surplus renewable energy and at the same time fulfilling a storage function. Hydrogen produced abroad and imported at high cost will sensibly be made available primarily to the basic materials industry.

In the roadmap, you call for foundries to be involved in local network planning at an early stage. Do you think politicians have understood this necessity?

Elke Radtke: There are examples where local and regional politicians are open to this idea – but it's the distribution network operators and energy suppliers who ultimately have to build the infrastructure. And that's where the problem lies: financing. Energy suppliers are happy to supply the electricity, but they don't see themselves as responsible for building the supply lines. Foundries are predominantly located outside urban areas – far from the nearest connection point to the industrial power supply. With assumed costs of up to one million euros per kilometre of power line, this quickly adds up to very high investment amounts. Typically, however, the power infrastructure required for the transformation of a plant location is not part of subsidy programmes. There is a need for adjustment here as well.

Considering the economic and political conditions, how confident are you that the industry can achieve greenhouse gas neutrality by 2045?

Christian Schimansky: It is in the DNA of a typical medium-sized foundry to think long-term and, for this reason alone, to act sustainably. In many cases, a foundry is the largest employer in the area and is also involved in social and local politics. What's more, foundry owners are innovative. It is this combination of a sense of responsibility and sustainability that allows us to look to the future with confidence. The transformation is technically feasible. If the political framework conditions are right and the market environment becomes more positive again, our companies will also master this enormous challenge. We see ourselves as enablers of transformation: without cast components, there would be no climate-friendly mobility, no wind and water power, no sustainable construction. We want to and will leave behind an environment worth living in for future generations – without a negative footprint.

If you were to recommend specific steps to a foundry company, where should it start?

Elke Radtke: The first step is to identify the CO2-intensive processes. This is done by calculating the company's carbon footprint. To this end, we have co-developed the FRED tool, which allows each foundry to map the process landscape of its site and thus calculate CO2 emissions very accurately. Naturally, the thermal processes in foundries account for a large proportion of the carbon footprint. In non-ferrous metal foundries, the primary metals used also have a large ‘CO2 backpack’. With FRED, measures to reduce CO2 emissions can be simulated after this hotspot analysis – for example, switching from fossil fuels to electricity in melting operations or converting the forklift fleet from gas to battery operation. Based on this, a transformation plan is then drawn up. This plan specifies which steps will be taken and within what time frame in order to move closer to climate neutrality.