WACKER GLOBAL CEO HEDA: Increasing the proportion of green electricity and improving the carbon trading mechanism

On October 31, local time, the 26th United Nations Climate Change Conference (Cop 26) will kick off in Glasgow. The Conference is also seen as the last chance for countries around the world to reverse the climate change process through climate negotiations.

The key to tackling climate change is to control carbon emissions and achieve global carbon neutrality as soon as possible. So far, most developed countries have pledged to be carbon neutral by 2050; China has said it aims to peak carbon by 2030 and be carbon neutral by 2060.

The chemical industry has long been considered a "carbon emitter", and under the global carbon neutrality goal, companies are reducing their carbon footprint through changes in production processes.

Christian Hartel, president and CEO of Wacker Chemie, said in a video interview with the first financial reporter that increasing the proportion of green electricity is a very key driver for carbon dioxide emission reduction. WACKER has been electrifying its production processes for many years to reduce the use of fossil fuels and increase the use of clean green electricity. "Wacker's entire process electrification level has now reached 60 percent, far exceeding the overall level of 25 percent in Europe." Heda told the first financial reporter.

In addition to investing in increasing the proportion of green energy, Hektar believes that the carbon trading mechanism is also a very good auxiliary tool for carbon neutrality, because it will keep the trading price of carbon dioxide and emission prices at a similar level in the world.

Boosted by strong demand for materials such as silicones, Wacker Chemie's sales in the third quarter of this year increased by 40 percent from the same period last year, and the Group's EBIT more than tripled year-on-year, with group sales expected to reach around €6 billion in 2021 and profits between €1.2 billion and €1.4 billion.

"The demand for chemical materials related to sustainable energy development will grow significantly in the next decade, such as the application of silicone products in electric vehicles, cable accessories, the application of polysilicon in solar photovoltaic cells, and environmentally friendly building materials." Heda told the first financial reporter.

In order to expand production capacity in the Chinese market, WACKER recently announced the acquisition of a 60% stake in Shandong Silicon, which is another example of a foreign chemical company deepening its localization strategy.

In response to the recent power curtailment measures taken by the Chinese market to limit corporate energy consumption, Hektar expressed its understanding. He told the first financial reporter: "The core problem is that people need more green and renewable energy, and now we are not only seeing the gap in demand for electricity, but also higher demand for other clean energy sources." ”

Paul Lindblad, president of WACKER Greater China, told First Financial: "In my opinion, a longer-term solution lies in the reform of electricity prices, which is more of a charging model based on market price adjustments, which can help power resources flow to manufacturers with higher value." He believes that this will also promote the development of the chemical industry, for example, it will increase the demand for polysilicon.

However, WACKER still warned about the impact of energy limits on raw material supply and raw material prices. "At the moment WACKER is still able to source the raw materials we need, even though we have to pay a higher price." He told the first financial reporter, "It depends on whether such a situation will affect future demand, and whether the chemical plant, as an upstream manufacturer, can transmit the price layer to the downstream." For now, our customers are still able to accept the current price increase. ”

Hekda believes that the previous rise in raw material prices has mainly focused on oil and chemicals, while next year's rise in raw materials may involve silicon metal and electricity prices. "This problem is not only facing our company, nor is it just unique to China, there will be such a challenge in the world." He told the first financial reporter, "The way we can deal with it is to work with different suppliers, and at present, it is basically guaranteed that the amount needed next year can be guaranteed, although the price will still rise." ”