Europe

Rolling with it: German firms try to innovate their way out of energy crisis

As temperatures drop and Russia throttles gas deliveries, the race is on to avert disaster

Germany's minister of economics and climate protection Robert Habeck and German chancellor Olaf Scholz. “If things go well with saving gas, and we have luck with the weather, then we have a good chance to get through the winter,” said Mr Habeck on Monday. Photograph: Jens Schlueter/Getty Images

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Derek Scally
Tue Sep 20 2022 - 17:11

Germans of a certain age still shudder at the memory of scratchy wartime toilet paper and coffee ersatz made from roasted chicory and malt.

Eight decades on, with necessity once again the mother invention, Germany’s leading toilet paper manufacturer hopes to cut production costs using coffee grinds instead of wood pulp.

The family-owned firm Hakle already has its back to the wall: two weeks ago it asked to be placed into administration, squeezed by soaring energy and raw material costs. The Düsseldorf company, just six years shy of its centenary, hopes its breather from creditors will also it restructure a business.

Hakle’s innovative new toilet paper — with a quarter coffee grounds replacing wood pulp — is already in the test phase and may well help save the company.

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“While 25 per cent coffee grounds doesn’t sound like a lot, it means that a quarter fewer trees have to be used for the product,” said Ms Karen Jung, Hakle’s chief marketing officer.

Using 60,000 megawatt hours of gas annually and 40,000 MWh of electricity, Hakle’s energy bills — like many German manufacturing firms — have risen sharply in the last year.

But its search for alternative raw materials to wood pulp — which has risen in price by 40 per cent this year alone — gives it some wriggle room not available to other German firms.

Official figures out last week showed average production costs in Germany were up 45.8 per cent in August alone, the highest spike since records began in 1949. Energy prices in general have jumped 139 per cent, with electricity up 175 per cent, meaning German inflation is likely already above the current 7.9 per cent.

Faced with unaffordable energy bills, a July survey indicated that every third energy-intensive German manufacturer is scaling back production.

“These are alarming figures,” said Mr Peter Adrian, president of the German chambers of industry and commerce (DIHK), who published the survey of its members. “The reduction in gas production we’re seeing is not down to energy savings — but down to machines being shut down.”

As temperatures drop, and Russia throttles gas deliveries via the Nord Stream pipeline, the race is on to avert disaster in Europe’s economic engine room.

Chancellor Olaf Scholz will visit Saudi Arabia, Qatar and the United Arab Emirates at the weekend. There he hopes to flesh out previously aspirational deals on liquefied natural gas deliveries for new floating LNG terminals on Germany’s northern coast.

Federal economics minister Robert Habeck was in the Middle East last spring to discuss possible LNG shipments to replace Russian gas. With gas now throttled entirely through the Nord Stream pipeline from Russia, German officials say that some Middle East energy suppliers have been anxious to exploit their strategic advantage over price and conditions for LNG agreements.

Construction begins this week on Germany’s first LNG terminal, with the new facility expected to go online in March. All German needs now is liquefied gas deliveries for its companies and home-owners.

Mr Habeck announced on Monday that German gas reserve facilities are now 90 per cent full, meaning the country has enough gas bunkered for about a quarter of annual supply.

But a cold winter could see those reserves vanish by March, his officials admit, with Germans burning off gas faster than it can be replenished.

“If things go well with saving gas, and we have luck with the weather, then we have a good chance to get through the winter,” said Mr Habeck on Monday, inspecting German energy facilities on the Baltic coast.

While others struggle, Hakle hopes that its product innovation will help it weather the financial storm back into calmer waters.

Two years ago, in the first months of the Covid-19 pandemic, it introduced toilet paper that replaced wood pulp with up to 30 per cent grass cuttings from the local Düsseldorf region.

As the coffee grinds tests continue, Hakle is hoping it will prove a second cost boost for its green innovation efforts.

“For us it’s about making products more responsibly without doing without comfort,” said Ms Jung, Hakle marketing director. “We would rather not use forests for a disposable product. On the other hand, though no one wants to go back to the scratchy toilet paper of the 1930s.”