In the following interview, Horatio Evers explains how BASF – one of the world’s largest chemical groups – is organising its energy transformation and what conditions need to be in place for it to be a success.
REH: Mr Evers, what does a chemical group have to do with ‘renewable energy’?
Horatio Evers: "That’s very simple: we all need to solve the greatest global challenge of our time – climate change! This requires effort along the entire industrial value chain, from the production of energy through its distribution to its use. And this is where industrial firms like BASF come in. A huge amount of CO2 can be saved at the start of the industrial value chain in particular. And we take this very seriously. By 2030, we aim to reduce our total CO2 emissions by 25% compared to 2018 and achieve net zero emissions by 2050. We therefore need access to large amounts of renewable energy."
REH: How do you intend to achieve these ambitious targets?
Horatio Evers: "In order to achieve our climate protection targets, we’re implementing a large number of measures and investing around EUR 4 billion in these alone by 2030. Electrification using renewable energy is the key to this. Our measures include research into new technologies and the transition from conventional to renewable electricity. The increasing electrification of our processes will at least double or even triple BASF’s global electricity requirements by 2040. In order to meet this demand for green electricity, we’re pursuing a so-called ‘make-and-buy’ strategy."
REH: What is behind this ‘make-and-buy’ strategy?
Horatio Evers: "‘Make’ means investing internally in renewable energy systems. One example of this is our investment in the world’s largest offshore wind farm, ‘Hollandse Kust Zuid’, which is currently being built in the Dutch sector of the North Sea. This wind farm has an output of 1.5 gigawatts. Around half of its green electricity will be supplied to BASF’s European sites. We’ve also built a solar farm in Brandenburg, which partially covers the electricity requirements of BASF’s second largest German site in Schwarzheide.
‘Buy’ means signing long-term supply contracts for electricity from renewable sources. These are also known as Power Purchase Agreements (PPAs). Here too, we’ve already implemented our first projects. For example, we’ve concluded a PPA that will secure us 186 megawatts from the German offshore wind farm ‘Borkum Riffgrund 3’ from 2025. Other PPAs give us access to green electricity from renewable sources in Spain and even from the US."
REH: What exactly is the role of BASF Renewable Energy GmbH in this?
Horatio Evers: "In order to consolidate its expertise and ensure access to sufficient quantities of green electricity, BASF has decided to combine all its renewable energy activities in a separate subsidiary. BASF Renewable Energy GmbH was founded last year for this purpose. In our team, we cover all the main energy management tasks – from electricity trading to managing projects, PPA and risk, to energy legislation issues."
REH: What do you need from government in order to achieve your climate protection targets during the current energy crisis?
Horatio Evers: "Despite the difficult situation caused by the crisis, BASF is adhering to its climate protection targets and intends to further reduce emissions. Electrification using renewable energy is the key to this. In order to make significant progress with our investments in wind turbines in Germany, for example, we primarily require planning reliability from government. An accelerated expansion of the power grid is also essential in order for renewable electricity to reach industry and consumers."
REH: Can you give us an example of feeling that your planning reliability is restricted?
Horatio Evers: "Of course, I can think of several. These include the recently introduced pan-European profit levies for green electricity producers, for example, which mean that it’s only possible to carry out the planned transport of green electricity from the Netherlands to Germany at a huge loss. The current discussions regarding industrial electricity prices are also creating uncertainty. The amount and allocation of these are completely open, meaning that decisions regarding alternative supply concepts – such as PPAs – are being delayed. We also take a critical view of the debate regarding the introduction of so-called bilateral contracts-for-difference, as the electricity from these plants is no longer available for industrial consumption."
REH: What has fascinated you most during your first year as CEO of BASF Renewable Energy GmbH?
Horatio Evers: "All my colleagues and business partners have an incredible drive to successfully implement the energy transformation. I observe incredible joy and motivation for this extremely important topic during my work. It’s a lot of fun. I was also fascinated to see the wind turbines at our ‘Hollandse Kust Zuid’ offshore wind farm, which are around 250 metres high, at first hand."
Thank you for talking to us, Mr Evers.