{"id":18629,"date":"2020-05-25T17:11:42","date_gmt":"2020-05-25T15:11:42","guid":{"rendered":"https:\/\/fedil.lu\/?post_type=position&p=18629"},"modified":"2020-05-27T15:00:42","modified_gmt":"2020-05-27T13:00:42","slug":"the-voluntary-agreement-va-in-times-of-crisis-how-can-the-va-contribute-to-a-fast-recovery-of-the-industry","status":"publish","type":"position","link":"https:\/\/fedil.lu\/fr\/positions\/the-voluntary-agreement-va-in-times-of-crisis-how-can-the-va-contribute-to-a-fast-recovery-of-the-industry\/","title":{"rendered":"The Voluntary Agreement (VA) in times of crisis: How can the VA contribute to a fast recovery of the industry?"},"content":{"rendered":"

1. Energy Efficiency in times of the Corona Crises\u00a0<\/strong><\/p>\n

Due to the<\/span> measures to contain the<\/span> corona<\/span> cris<\/span>i<\/span>s<\/span>,<\/span> much of <\/span>Luxembourg\u2019s econom<\/span>ic <\/span>sectors\u2019 activities have <\/span>significantly <\/span>decelerated<\/span>. Tw<\/span>o<\/span> reliable<\/span> indicators revealing about how much the local manufacturing <\/span>sector<\/span> is impacted<\/span>,<\/span> are the<\/span>ir<\/span> consumption volumes of electricity and gas<\/span>. <\/span>Indeed,<\/span> since March<\/span> 2020<\/span>, t<\/span>he local energy <\/span>grid operators<\/span> report<\/span> consumption <\/span>drops <\/span>between 2<\/span>5<\/span>-30<\/span>%<\/span> in<\/span> the<\/span> 65KV and 20KV <\/span>electricity <\/span>grid<\/span> which is mainly used by <\/span>the manufacturing sector<\/span>.<\/span> T<\/span>he volumes of industrial gas consumption decrease<\/span>d<\/span> similarly<\/span>.<\/span>\u00a0<\/span>\u00a0<\/span><\/p>\n

Those <\/span>unforeseen<\/span> energy <\/span>savings<\/span> show that t<\/span>he <\/span>measures taken to contain the <\/span>C<\/span>OVID<\/span>-19 virus <\/span>ha<\/span>ve<\/span> a <\/span>devastating<\/span> impact on<\/span> industrial activity. <\/span>Even though previsions about the development of future consumptions are difficult, <\/span>some <\/span>grid operators expect that the second quarter of 2020 will <\/span>continue<\/span> to stay about <\/span>20% <\/span>below <\/span>the <\/span>norm<\/span>al consumption levels. <\/span>And i<\/span>nsiders from the energy sector <\/span>do not <\/span>believe that<\/span> even by the end of this year,<\/span> industrial energy consumption will have fully recovered<\/span>. This would make 2020 a year with one<\/span>–<\/span>of<\/span>–<\/span>a<\/span>-kin<\/span>d energy savings.<\/span>\u00a0<\/span><\/p>\n

While those energy savings are real, <\/span>within the context of climate policy, <\/span>the <\/span>industry cannot take advantage of them in its <\/span>primary<\/span> energy<\/span>–<\/span>savings tool, the Voluntary Agreement (VA)<\/span> 2017-2020<\/span>. On the contrary, <\/span>the VA<\/span> risks <\/span>to penalise<\/span> them <\/span>as the <\/span>agreement\u2019s <\/span>target indicator<\/span> measures <\/span>energy <\/span>efficiency (EE) as a relation of <\/span>consumption<\/span> to production<\/span> output. <\/span>I<\/span>n <\/span>the<\/span> manufacturing <\/span>industr<\/span>y<\/span>, energy consumption <\/span>is<\/span>,<\/span> however, <\/span>rarely<\/span> linearly <\/span>related to <\/span>production output<\/span>. This is due to two <\/span>principal<\/span> features common to<\/span> most production tools in manufacturing:<\/span>\u00a0<\/span><\/p>\n

    \n
  1. Production tools require a minimum, fixed level of energy threshold under which no production is possible<\/span>.<\/span> I<\/span>n other words, <\/span>for a given time, <\/span>whether the tool produces one part or one<\/span> thousand parts, this minimum level of energy <\/span>does not change<\/span>. <\/span>Machine<\/span>s with this characteristic can be found in<\/span> almost all <\/span>of Luxembourg\u2019s <\/span>manufacturing sectors<\/span>, <\/span>also<\/span> in the <\/span>small-and-medium-sized enterprise (<\/span>SME<\/span>)<\/span> sector<\/span>: <\/span>in <\/span>plastics<\/span> processing<\/span> and <\/span>injection moulding<\/span>, <\/span>in the <\/span>chemical industry<\/span>,<\/span> in the rubber and tire <\/span>manufacturing<\/span>, <\/span>in the<\/span> packaging industry<\/span> and even in the nutritional industry.<\/span>\u00a0<\/span>\u00a0<\/span><\/li>\n
  2. Not all p<\/span>roduction tools <\/span>can <\/span>be switched-off<\/span> efficiently.<\/span> This is typically the case for high<\/span>–<\/span>temperature <\/span>processes<\/span> where switching<\/span> the process tool <\/span>off between two badges <\/span>or shifts <\/span>requires more energy for firing<\/span> it <\/span>up <\/span>again <\/span>that leaving it on a stand-by temperature during idle time<\/span>. <\/span>Some<\/span> device<\/span>s, such as <\/span>high<\/span>–<\/span>temperature <\/span>ovens <\/span>risk to <\/span>even <\/span>disintegrate in part <\/span>if a minimum temperature is undercut.<\/span> Those<\/span> oven<\/span>s<\/span> cannot be switch-off, <\/span>also<\/span> if no badge<\/span>s are<\/span> schedule<\/span>d<\/span> for an extended <\/span>period<\/span>.<\/span> Tools with this characteristic <\/span>are used<\/span> in<\/span> Luxembourg\u2019s<\/span> energy<\/span>–<\/span>intensive industries such as the <\/span>steel and aluminium industry, <\/span>in cement production and <\/span>glass production.<\/span>\u00a0<\/span><\/li>\n<\/ol>\n

    As the <\/span>main indicator of the VA, <\/span>the <\/span>energy efficiency index is a <\/span>fraction<\/span> calculation, <\/span>t<\/span>he <\/span>two characteristics<\/span> described above<\/span> deteriorate<\/span> the energy efficiency index<\/span> severely<\/span> when <\/span>the production<\/span> output <\/span>sharply <\/span>drops<\/span>.<\/span> A total stand<\/span>still of<\/span> the <\/span>production output <\/span>as experienced in <\/span>many sectors during the corona crises <\/span>is the worst case for companies running tools <\/span>that <\/span>cannot be <\/span>switched<\/span> off<\/span>.<\/span>\u00a0<\/span>\u00a0<\/span><\/p>\n

    Furthermore, the EE index\u2019<\/span> balance is <\/span>established<\/span> by measuring <\/span>the <\/span>EE <\/span>achieved <\/span>in the<\/span> s<\/span>ing<\/span>le<\/span> year <\/span>of <\/span>2020. In other words, the agreement <\/span>calculates <\/span>EE improvement<\/span>s<\/span> by <\/span>mea<\/span>sur<\/span>ing the difference in EE<\/span> improvements <\/span>between <\/span>a<\/span> reference<\/span> and <\/span>the \u201clanding\u201d <\/span>year <\/span>in <\/span>2020<\/span>.<\/span> I<\/span>ntermediate achievements<\/span> or improvement<\/span>s<\/span> reached during<\/span> 2017,<\/span> 2018 or 2019<\/span> are not considered<\/span>.<\/span> Du<\/span>e<\/span> to the disruptions caused by the coronavirus in 2020<\/span>,<\/span> the <\/span>very <\/span>year determin<\/span>ing<\/span> the <\/span>achievements<\/span> of the<\/span> VA<\/span>\u2019s whole <\/span>period<\/span> cannot be considered <\/span>as <\/span>representative.<\/span>\u00a0<\/span><\/p>\n

    2. The VA\u2019s contribution to a fast recovery of the industry\u00a0<\/strong><\/p>\n

    With <\/span>now<\/span> several<\/span> weeks into <\/span>one of the worst<\/span> economic <\/span>crises<\/span>,<\/span> and with no fast recovery in sight, <\/span>most companies<\/span>\u2019<\/span> EE ind<\/span>ices<\/span> of the current <\/span>VA<\/span> 2017-2020 <\/span>ha<\/span>ve<\/span> significantly <\/span>deteriorate<\/span>d<\/span>. The pace of deterioration seems to be so <\/span>fast<\/span> that <\/span>the<\/span> crisis period <\/span>risks annihilating <\/span>much of <\/span>the<\/span> EE efforts <\/span>companies <\/span>have <\/span>made <\/span>within the context<\/span> and according to the methodology<\/span> of the Voluntary Agreement <\/span>in<\/span> the <\/span>last<\/span> three<\/span> year<\/span>s<\/span>. Stake<\/span>s<\/span> are high, <\/span>because<\/span> if<\/span> adhering companies <\/span>do<\/span> not <\/span>achiev<\/span>e<\/span> the target<\/span> index<\/span>,<\/span> they<\/span> may see their <\/span>renewable energy contribution<\/span> in <\/span>the <\/span>electricity<\/span> bill<\/span> increase more than <\/span>11-fold<\/span> overnight. Such a scenario <\/span>would <\/span>hit<\/span> many <\/span>manufacturing companies<\/span> in their essence<\/span> as they have<\/span> already today <\/span>a <\/span>complicated<\/span> cash flow situation due to the corona crises<\/span>.<\/span>\u00a0<\/span>\u00a0<\/span><\/p>\n

    FEDIL estimates that<\/span> if<\/span> Luxembourg\u2019s<\/span> top 10 <\/span>industrial electricity <\/span>consumers<\/span> would drop<\/span>-out<\/span> from<\/span> category C into category B <\/span>in<\/span> the <\/span>renewable energy compensation scheme, they would have <\/span>together <\/span>additional<\/span> unforeseen<\/span> costs of<\/span> at least<\/span> 19 <\/span>million<\/span> Euros <\/span>each year <\/span>for the <\/span>period<\/span> 2017-2020.<\/span> Luxembourg\u2019s <\/span>SME sector would be impact<\/span>ed<\/span> by <\/span>average <\/span>additional <\/span>annual costs <\/span>per company<\/span><\/i> of <\/span>at least<\/span> 150 k\u20ac<\/span> for each year of the current agreement.<\/span>\u00a0<\/span>\u00a0<\/span><\/p>\n

    In the current context of the corona cris<\/span>i<\/span>s, t<\/span>he<\/span> additional<\/span> energy<\/span> costs<\/span> for companies<\/span>,<\/span> as <\/span>assessed<\/span> in the previous <\/span>section<\/span> are going to hit <\/span>companies<\/span> hard<\/span>.<\/span> Most of those companies are already <\/span>encountering <\/span>a <\/span>reduced cash flow<\/span> due to the corona crisis<\/span>. Some<\/span> are <\/span>obliged to postpone or cancel scheduled investments<\/span>.<\/span> FEDIL t<\/span>hus urges the stakeholders of the<\/span> V<\/span>oluntary<\/span> A<\/span>greement to <\/span>amend<\/span> the <\/span>current<\/span> agreement\u2019s contract<\/span>.<\/span> This would represent the VA\u2019s contribution to a fast recovery of the industry.<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

    1. Energy Efficiency in times of the Corona Crises\u00a0 Due to the measures to contain the corona crisis, much of Luxembourg\u2019s economic sectors\u2019 activities have significantly decelerated. Two reliable indicators revealing about how much the local manufacturing sector is impacted, are their consumption volumes of electricity and gas. Indeed, since March 2020, the local energy… Read more »<\/a><\/p>\n","protected":false},"author":16,"featured_media":0,"template":"","class_list":["post-18629","position","type-position","status-publish","hentry"],"acf":[],"_links":{"self":[{"href":"https:\/\/fedil.lu\/fr\/wp-json\/wp\/v2\/position\/18629","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/fedil.lu\/fr\/wp-json\/wp\/v2\/position"}],"about":[{"href":"https:\/\/fedil.lu\/fr\/wp-json\/wp\/v2\/types\/position"}],"author":[{"embeddable":true,"href":"https:\/\/fedil.lu\/fr\/wp-json\/wp\/v2\/users\/16"}],"version-history":[{"count":0,"href":"https:\/\/fedil.lu\/fr\/wp-json\/wp\/v2\/position\/18629\/revisions"}],"wp:attachment":[{"href":"https:\/\/fedil.lu\/fr\/wp-json\/wp\/v2\/media?parent=18629"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}