Who is systemically important – and who is not?

Should the shortage of gas continue to escalate, the federal government can initiate extensive regulations for the distribution of gas supplies in the emergency phase of the "Gas Emergency Plan". In concrete terms, the Federal Network Agency would be used as a "federal load distributor" and allocate the gas in Germany. It is already clear that private households, social institutions and gas-fired power plants will be given priority. However, it is still unclear what the company's priority is in concrete terms.

How the network agency wants to prioritize

In order to determine how the gas is distributed in an emergency, the Federal Network Agency is to prepare a study by October and provide a communication platform. The study aims to show the effects of a gas shortage on value chains. The aim is to assess how gas reductions could affect the "supply of the population with critical goods and services," explains the Federal Network Agency.

In addition, there is the so-called gas safety platform. According to the Federal Network Agency, the data portal is used for the exchange with the large industrial gas consumers. All relevant information from gas consumers and network operators is to be brought together and evaluated here.

The Federal Network Agency plans to use this data to prioritize gas allocation based on the following criteria, among others:

Claudia Kemfert, energy economist at the German Institute for Economic Research (DIW), considers the Federal Network Agency's data processing to be useful: "It always has to be about system relevance. That means products that are important for society, such as food, pharmaceutical products and what is important for life. Luxury and sporting goods or tourism, these are things that can wait."

DIHK doubts the study

I have serious doubts that the vulnerability study "enables the Federal Network Agency to work across the board," says Sebastian Bolay, the energy officer at the German Chamber of Industry and Commerce (DIHK). The central problem is that no one can understand the entire supply chain. The question of which companies are systemically important cannot really be answered.

There is always the danger of forgetting a systemically important company, Bolay. A simple prioritization list for companies is not possible simply because many companies produce both systemically relevant and non-systemically relevant products. The energy expert explains that the often moral decision as to which production areas continue to run is then up to the company.

Extensive gas supply chains at BASF

One of the largest gas consumers in Germany is BASF in Ludwigshafen. CEO Martin Brudermüller does not envy the Bundesnetzagentur's role: "It's a very thankless task. With 45,000 sales products from just one BASF, they can't break it down down to the last detail."

The chemical giant accounts for almost four percent of all gas consumption in Germany. Not only many medium-sized companies depend on the products of BASF, but entire industries. For example, a raw material that BASF extracts from natural gas is important for the automotive industry: acetylene. The gas is used for electrochemicals, plastics and paints. If deliveries fail, bottlenecks in the auto industry are to be expected.

Fertilizers for farmers are produced from the raw material ammonia, also obtained from natural gas. BASF boss Brudermüller expects sharp price increases there next year. The farmers would then buy less fertilizer, he concludes: "Then it can also be expected that the harvests will be smaller and we will face shortages. This will affect the poorer countries in particular."

The chemical giant is already examining potential savings in gas consumption. According to Brudermüller, the group could reduce capacity, especially in ammonia production, and have it supplied externally. It would also be possible to switch some of the power generation from natural gas to heating oil. With these measures, Brudermüller is optimistic that he will play his part in the EU's gas savings plan. The additional costs due to the high energy prices will have to be passed on to the customers, according to the CEO.

Domino effects from lack of gas

However, if the gas deliveries to BASF fall below 50 percent of the usual amount, the group has to shut down its production. The domino effect that would be triggered through the supply chains is difficult to predict.

For the medium-sized company Gemem in the Palatinate, BASF is both customer and supplier. Up to 80 tons of chemical liquids for the automotive industry are processed every day. The largest part comes from the chemical company in Ludwigshafen. If they were to stop production due to a lack of gas, that would have drastic consequences, says managing director Martina Nighswonger: “Then I would have a problem. Then I would probably have to take short-time work, if not more.” Although the company itself is not directly dependent on the gas, it would be affected further down the supply chain.

Companies position themselves

The DIHK energy officer Bolay observes that more and more companies are trying to get a good position when prioritizing gas allocations: "Many report to the Federal Network Agency or their local network operators and declare themselves to be systemically important." Since there is no clear definition of systemic importance, almost every company finds arguments why they should be prioritized, according to Bolay.

DIW expert Kemfert also observes a lot of lobbying by companies: "As long as this uncertainty is there, the lobbyists try to make it clear where their systemic relevance lies." It is therefore important to create transparency and to wait for the data collected by the Federal Network Agency.

BASF CEO Brudermüller expects his company to prioritize gas shortages. "We assume that, of course, large parts of the chemical industry are really systemically important," says the top manager, "and will receive the appropriate attention."

From the point of view of the DIHK expert Bolay, it would have been desirable if the Federal Network Agency's vulnerability study had come much earlier. Kemfert also regrets the late reaction: "We should have started saving gas from day one of the war and collecting the data for the Federal Network Agency."