Monday, November 11, 2013

BASF to quit Germany due to "green" regulations

Pollution haven hypothesis in action.  The irony of course is that BASF is NOT even currently taxed.  This is an argument for the need to take into account the endogenity of environmental regulations.

Competitiveness concerns means the end of "effective" EU regulation at least for a few years.  The price of carbon is low and largely irrelevant as it is.

The interesting part of the threat given my recent work on environmental offshoring is the threat of "partial relocation".  

Chemical Giant BASF Threatens To Leave Germany Over Green Energy Costs
Focus Magazin, 10 November 2013

The chemical company BASF has threatened with a partial relocation of its production abroad if it will no longer be exempt from green levies on electricity.

BASF’s CEO Kurt Bock demanded from the government to maintain existing exemptions for energy-intensive industries. The incoming grand coalition of Christian Democrats (CDU) and Social Democrats (SPD) are reconsidering the exemptions for the multi-billion industry.

According to the head of the chemical giant, BASF fears additional costs of nearly 400 million Euros alone at the production site in Ludwigshafen. He did not provide any further information about the period during which this sum would have to be paid. He said that the additional costs are threatening the “competitiveness of the location”.

A few months ago, BASF decided to build an ammonia plant in the USA and not in Germany because of cheaper energy prices in North America. Bock had already intervened in Germany’s energy debate several weeks ago and indirectly threatened the relocation of BASF’s production.

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