The Spanish chemical industry is lobbying Brussels for a temporary exemption on payment for CO2 emission rights for combined cycle gas power plants. These plants burn gas to generate electricity and face higher costs from pollution charges that have more than doubled since the Ukraine conflict began. The Feique federation, representing major players in the sector, supports this measure as an emergency step during the ongoing energy crisis, aiming to lower electricity prices. Feique members include associations such as the chemical industry group, a national federation of producers and users, and other representative bodies within the sector.
At a price of 90 euros per megawatt hour, the wholesale price of electricity increases by about 40 euros per MWh due to the emission charging system. Feique proposed that certain combined cycle power plants be excluded from this payment as a temporary measure. This stance reflects a sense of urgency about the current crisis and the belief that a staged approach could be justified as the situation unfolds during the Ukraine war and the associated energy disruption. Teresa Rasero, the head of Feique, highlighted that the industry intends to maintain this approach until the energy crisis subsides.
The association prepared a formal position letter to convey its view to the government as it considers reforming the electricity market. The Ministry of Ecological Transition is evaluating the proposed reform, which Brussels reportedly regards as insufficient for the sector to meet its priorities. The proposed model envisions a system where renewable and nuclear energy prices are regulated, allowing generators to sign forward contracts directly at a competitive price.
Key decisions would focus on how power is produced from hydro, nuclear, and renewable sources and how each sector is supported by the RECORE framework and its 150 terawatt hour per year demand plan. The industry seeks a price structure similar to that seen in France, where industrial consumers pay a fixed price for electricity, while ensuring reasonable returns for generators. This would involve reducing regulated costs, tolls, and fees, along with adjustments to indirect CO2 offsets and compensation for demand management services.
On the funding side, discussions touch on new programs akin to those in Portugal, including direct subsidies aimed at stabilizing gas prices for the sector. The cumulative subsidies could reach several hundred million euros, with the goal of delivering reductions of up to 40 euros per MWh on consumer bills, potentially through support to retailers if needed. Access to these programs would be tied to meaningful consumption levels for participating companies.
End of Disruptions
The energy crisis, driven by the Ukraine war and Russian gas pressures, has hit Spain’s chemical industry hard. The sector has faced production shutdowns and job restructuring as costs rose. The industry expects some relief in the near term, with a tentative restart window targeted for late March or early April, when the remaining plants are anticipated to resume operations. The general manager of Feique noted that a recovery plan is already in motion and that most plants plan to be back online soon.
Last year, the chemical industry recorded higher turnover despite a slower pace of activity. Revenues reached close to 90 billion euros, reflecting price effects and weaker output, while basic chemistry remained the most affected area due to steep natural gas and electricity costs. Basic chemistry encompasses the production of essential raw materials used in fertilizers, purification, plastics, and industrial gases, and it accounts for a substantial share of the sector’s activity.
During the summer, many gas-using factories paused production amid the energy squeeze, as prices struggled to stay below critical thresholds and competitiveness within Europe came under strain. Looking ahead, the sector anticipates more stability in the second half of the year and a gradual improvement in demand. There is cautious optimism about a rebound in orders from key markets such as China, which had been a major source of work for Spanish manufacturers.
Attributed to a global energy crisis, the ongoing price volatility underscores the sector’s need for a stable, predictable framework that can safeguard competitiveness while supporting essential industrial activities. The discussion continues around how best to balance price regulation, market liberalization, and targeted subsidies to preserve industry health and employment across the country. [Citation: Feique and industry stakeholders. Attribution accompanies official statements and briefings.]