Calls to curb surging energy prices

Europe’s energy-intensive sectors are already facing spiralling costs ahead of the winter demand season. In this week’s pod, listen to a discussion on the consequences of soaring wholesale electricity prices for the non-ferrous metals sector and why some firms are calling for market intervention. Also, hear a critical view of the guarantees of origin market.

Guests: 

• Alexander Arnesen, Head of Power Procurement, Elkem
• Nick Keramidas, EU and Regulatory Affairs Director, Mytilineos
• Cillian O’Donoghue, Energy and Climate Change Director, Eurometaux

Transcript

0:01

News drives markets, and every day Montel's experience reporters are on top of the stories that shape European market developments. Can you afford to miss out? Go to montelnews.com for the latest price driving stories and a free trial.

Richard Sverrisson, Editor-in-Chief, Montel: 0:31

Hello listeners and welcome to the Montel Weekly podcast. Bring Your Energy Matters in an informal setting across Europe energy, or more specifically, the cost of energy has hit headlines. With media calling the situation a crisis and focusing perhaps rightly so on the increased costs for households and the vulnerable in society. There are a number of fundamental reasons that explain the high prices geopolitics, low wind, weak gas storage, intent connect outages, but politicians in several countries. Have questioned the working of the internal energy market with Francis Finance Minister in particular Bruno LeMar, calling it obsolete. In today's pod, we discuss the consequences of the soaring prices on the continent's electricity intensive industry, and ask what, if anything can be done to mitigate the impact, and also whether these high prices will spur some sectors into signing renewable. Power purchase agreements or PPAs. My name is Richard Sverrisson and I have the great pleasure of being joined today by several prominent experts from Europe's non Ferris metals industry. Alexander Arnesen of Norway's, Elkem a Silicon, and Pharaoh Alloys producer, A warm welcome to you.

Alexander Arnesen, Head of Power Procurement, Elkem: 1:44

Thanks a lot Richard, you, so again, great to be on the show after having listened to many of your excellent podcast. It's great to be here finally.

Richard Sverrisson, Editor-in-Chief, Montel: 1:50

Thank you Alexander. We'll try and get you back on as well. And then there's Nick Keramidas of Greece's Mytilineos, I hope I pronounced that correctly. And aluminum producer. So hello to you Nick.

Nick Keramidas, EU and Regulatory Affairs Director, Mytilineos: 2:01

Hello, Richard. Thanks for having me. Indeed. You pronounce it perfectly, and this is a remarkable achievement actually given the Greek name. But again, thanks for having me. It's great to be here.

Richard Sverrisson, Editor-in-Chief, Montel: 2:12

Excellent. And finally, Cillian O’Donoghue whose energy and climate change director at Eurometaux, the European Metals Association. Welcome to the Pod Cillian. Thanks,

Cillian O’Donoghue, Energy and Climate Change Director, Eurometaux: 2:21

Richard. And very good to be here.

Richard Sverrisson, Editor-in-Chief, Montel: 2:22

So I'd like to start off guys by talking about the soaring prices of electricity, also gas, but more specifically electricity. What's been the impact on industry and what will be the consequences if prices stay high for a prolonged period? Cillian, if I can start off with you here.

Cillian O’Donoghue, Energy and Climate Change Director, Eurometaux: 2:40

Yeah, I guess well, to begin, I would say it's really hitting us. We've seen a massive increase in the price. If you're buying for 40 euro megawatt hour this time last year, you're paying one 60 or higher in many member states. And if there's one sector, which is very exposed to high electricity prices is non-ferrous metals. As we know we're the most electro intensive of sectors. So by 40% of your cost is electricity. So if anybody is exposed, it's us. The impact has been, I would say, quite severe. We've seen quite a lot of curtailments and we don't know yet about closures, but we've seen quite a lot some of these things. I can't go into as much detail as would like for confidentiality reasons, but I think from the media you can see who's curtailed production. And also who is under serious trouble. If I can, a couple of things I would add would be that the impacts have been mitigated somewhat for a couple of reasons. I think the first is obviously lots of companies hedge. So the short term impact of the power price increase maybe doesn't always impact as much given this. The second thing is prices of metals, in particularly aluminum, are very high at the moment. So at the London Met Exchange, we have a good price of aluminum, which makes it things a little bit easier. And just the final thing I would say is. It's hard for, if you are losing money in your production, it's very hard to close on the short term. The ramping down and ramping up costs are very high. So we tend to continue producing. So that's what I would say in terms of the short term impacts and I think Nick can compliment.

Nick Keramidas, EU and Regulatory Affairs Director, Mytilineos: 4:11

Thanks Cillian. Yeah. What I would like to add is that as far as the aluminum industry is concerned, obviously we do have currently quite high prices. But one thing that needs to be flagged is that these sectors are price takers. So basically. You don't pass on increased electricity prices to consumers, you can't there is zero elasticity, so to speak. So basically, if we had seen this perfect storm at low prices, at the low cycle of the LME, for instance, then we would be discussing massive shutdowns in the European industry, even despite hedging strategies because inevitably the aluminum industry has to have visibility. As far as the electricity pricing is concerned for a longer periods of time, and this I wouldn't say it seems to be easing out, out anytime soon, so I think the risk is still there.

Richard Sverrisson, Editor-in-Chief, Montel: 5:02

Alexander, if I can bring you in here as well. It's very high price in Europe, but it's more of a. Global phenomenon as well. They're high in Asia. In America. What can you say about the exposure of European companies here in this global context?

Alexander Arnesen, Head of Power Procurement, Elkem: 5:14

It's a good question. And also, as Snick said, our industry, it's a price. Take your industry, the the price of metals that's set on the global stage at the price to aluminum and also all kinds of other. As well. So the important point for our industry is to remain competitive on a global scale. And the surge in power prices that we have seen over the last couple of weeks and last few months actually applies in principle to all countries. But in, in practice it applies most mostly to Europe. And the reason for that is that we have a liberalized power market in Europe. Industry hedge power they do that at market prices whilst industry and other countries are, they're mostly paying a regulated tariff. It's a tariff that's decided by either national or local authorities. So they're not exposed to the same kind of price surge that we have seen recently in Europe. And that's a worry for the long term.'cause as I said, at some point the long-term PPAs, they have to be renewed at some point in time and then we're exposed to the much higher market prices in Europe as compared to our competitors globally.

Richard Sverrisson, Editor-in-Chief, Montel: 6:14

We'll return to that discussion a bit later, but if I can stick with you, the market conditions, as Cillian mentioned as well, are vastly different from what they were a year ago. Have some. Companies and sectors hedge their exposure better than others? Alexander?

Alexander Arnesen, Head of Power Procurement, Elkem: 6:29

Yeah, I think what you generally see, or in my experience, it's mostly larger companies more power intensive companies. They tend to have a more well developed hedging programs. They tend to hedge. Longer out on the curve, signing typically PPAs for 5, 10, 15 years, something like that. Whilst smaller companies they tend to have I would call it the less sophisticated hedging strategy. They hedge for a much shorter period of time. Sometimes they're fully exposed in the spot markets. And those companies are also, they usually have a smaller balance meaning that they're more financially vulnerable. So there, the companies are running a much high risk, especially in the short term,

Richard Sverrisson, Editor-in-Chief, Montel: 7:08

Although it's a different sector. We've seen certainly with the power supplies in the uk, people are talking of massive amounts of bankruptcies. And maybe the same could apply to SMEs. Should this continue? Nick, have you got something to add here about the small and medium sized enterprises?

Nick Keramidas, EU and Regulatory Affairs Director, Mytilineos: 7:21

As far as large enterprises are concerned the ones that do hedge, this is not necessarily a strategy that's let's say an attack strategy is rather a defensive strategy. I think that once one, one realizes the exposure, the actual exposure of an aluminum, a primary aluminum producer to electricity prices, then you realize that buying electricity. A large a large share of your electricity at the sport market is act absolutely a no go. So basically quitting a study by the German EWI if, for instance, your power price increases by 10 euros that devours roughly 25% of your GBA. So basically you cannot possibly sit back and enjoy the ride and just expose your production costs to fluctuations in the market. However, that said, this hedging is not well tantamount to immunity, let's say to wholesale prices. Part of the electricity is regularly procured. In spot markets or for optimization reasons and so on, so forth. So I wouldn't go so far as to say that large energy intensive industries are completely immune. Definitely agreeing with Alex also that long-term contracts are not, let's say. Pania, it's something that will last but not forever. So basically you should expect that these will eventually the duration will phase out and you would have to face the actual conditions in the wholesale markets. Again,

Richard Sverrisson, Editor-in-Chief, Montel: 8:52

I mentioned in my intro some. Calls for politicians, for calls for intervention in the market as it is at the moment. We've seen noises from France, from Spain, Cillian, if I can bring you in here, what can or should be done to, to shield industry from these extreme price surges?

Cillian O’Donoghue, Energy and Climate Change Director, Eurometaux: 9:11

So I think there's there's two levels for the, could be potential action. First is the European level, and then second is the member state level. I think most of the real concrete actions can be done at member state level, but at the same time. We would like to see, and we've written to the European Commission a public letter. Some action at the European level. And I think some things the European Commission can do, and let's not forget, they are the ones who set the whole kind of architecture of the energy and climate framework. Some things they could do. We had po five policy requests in our letter. I think the first thing we'd like to see is we think the commission should monitor particularly the gas market shortages this winter. We hope that won't happen, but that's something where we think. Commission should look closely. The second thing is the carbon price. The EU ET s price is very high at the moment. It's over 60 Euros a ton. I know from some people's perspective that is what we should be aiming for. But looking ahead, we see that as potentially getting higher. So I think we should have some mechanism to ensure that the ETS price doesn't go out of control. And without getting too technical, we think the market stability reserve or potential other mechanisms could maybe limit the price spikes Also a few other things we think the commission could do would. The most important thing in this whole decarbonization process is the availability of carbon free electricity at globally competitive prices. It's something Alex and Nick also spoke about, and that's such an important enabler of the transition that we think the commission should be doing more to ensure that happens. Also, and Nick can elaborate in more detail, but the idea of kind of carbon free PPAs, the commission probably needs to be more flexible working with member states to ensure that we can sign these PPAs outside of the Nordic market. They're the main things we would say. And the final thing is just, I think the commission needs to be more flexible in terms of state aid rules.'cause looking ahead to climate neutrality by 2050, it's not a straight road. There's gonna be a lot of bumps on the path. We'll need interventions from member states, particularly like we're seeing now with price spikes. I think more flexible state aid rules, which will allow member states like Spain, France, which we've seen in recent weeks, to intervene to give some relief to industry. I think we're gonna need more of that going forward. So there are a few things we would see. I think my colleagues can elaborate a bit more at the member state level.

Richard Sverrisson, Editor-in-Chief, Montel: 11:29

This would be relief in terms of the tax and, sorry, the tax, the tariffs the levies outside the pure energy costs, for example.

Cillian O’Donoghue, Energy and Climate Change Director, Eurometaux: 11:36

Yeah exactly. Yeah. I think with electricity, yours have to break it into the energy components and the regulatory components, and sometimes the regulatory opponents can be huge impact on the overall price. And in particular from our side, there is the ETS indirect carbon costs. Which is basically the ETS cost is passed on to us via high electricity prices, and you have a system of kind of indirect compensation across Europe that is not implemented in every member state. So we think the commission should be encouraging member states to provide compensation there, and we think member states should give that compensation. That's just one example. There's quite a few things where the commission work with member states could intervene.

Richard Sverrisson, Editor-in-Chief, Montel: 12:12

That's very interesting. So now Alexander, would you like to add something to, to the discussion around measures that can be taken to shield industry in such a high price environment?

Alexander Arnesen, Head of Power Procurement, Elkem: 12:20

I think first of all I do support what kill just said, especially about. The CO2 compensation it's crucial for power intensive industry in Europe competing on the global stage. I think it's it's interesting in this discussion that's been in the media of price intervention in the markets. It mainly at this stage it seems to mainly focus on and consumers, households and so on. What's not been discussed so far is that is just a cure for the symptoms. It's a cure for the high high prices, and it's not really a cure for the underlying problem, which is a lack of energy. There's a shortage of gas, there's a shortage of renewable energy in the system, and that's what's causing the prices to surge. So just relieving consumers of of energy taxes and so on, while it's a noble act for sure. It doesn't really solve the underlying problem, which is an energy shortage, and that's the thing that really has to be addressed.

Richard Sverrisson, Editor-in-Chief, Montel: 13:09

Nick, anything to add to this?

Nick Keramidas, EU and Regulatory Affairs Director, Mytilineos: 13:10

Yes. Thanks. Building on what Kian and Alex just mentioned, there's the short term and the long term perspective in this exercise. When it comes to the short term, I would actually align with your electric on this who suggest that interventions as far as taxes are concerned and stuff like that can actually be a good patch. Right now, including our proposal for rerouting CO2 revenues that's the proposal of the Greek government actually rerouting part of the CO2 revenues to relieve consumers. And by that I would flag what Alex already mentioned, that the consumers are not just households. But industry as well from the price search. But that said, as far as the long term is concerned, I think what we need to focus on is well holding a solid and robust discussion on giving access to competitively priced green electricity, particularly for the electric intensive industry. Through schemes that Boost Recipe PPAs in the long run, this we believe is a recipe for success. Spain's reaction, for instance, to this debacle right now, I would actually say it's not really advisable. By that structural changes to the long-term electricity market design under this panic situation. Or not the best way for policymaking. I think this this requires solid discussion surrounding the market design and things like that. And this needs to happen well in a sane environment rather than as a reaction to current price stages. Absolutely. That would be a

Richard Sverrisson, Editor-in-Chief, Montel: 14:42

knee jerk reaction. And those are a are really very effective. Cillian you mentioned the letter that you'd sent to the commission. Do you feel that the commission is listening to the industry concerns?

Cillian O’Donoghue, Energy and Climate Change Director, Eurometaux: 14:53

Yeah I think in fairness to the commission, they have reacted and they said they're gonna come with a communication strategy on the 4th of October, which is relatively soon. I think the Commission by nature are very good at setting overall frameworks. I think that's where they're very strong in terms of reacting to short-term developments. They are much more kind of slower paced than a member state. The one exception would maybe be, our, when the COVID crisis first hit, they really loosened the state aid rules and allowed member states to intervene. But I think that's the exception to the rule. I think the commission is generally slow to react to emergency developments. So we'll have to see what will be in the strategy. And also we'll have to see how much focus is on industry.'cause there's two sides to this kind of emergency, is the consumer households who are really getting hit. But also there's the very electro intensive industry who's been hit very hard. So we are discussing with the commission and with other energy intensives. We've sent some input. I think the industries which have been most hit is non-ferrous metals. And then I think the fertilizers industry has been hit very hard as well. So we'll have to see what's in the strategy and we'll have to see how much of what we recommend they integrate into upcoming strategy. If I can, more broadly speaking and looking ahead, the commission has a very clear strategy of climate neutrality by 2050. And as part of that, I think it's very important that electricity prices stay in check. I'm simplifying here, but looking ahead to 2050. We need two revolutions. We need industry to electrify as much as possible, and we need power to decarbonize and. If power doesn't decarbonize or if power becomes too expensive in the decarbonization process, it's going to have major implications in that. It would be a big disincentive for other industries like steel chemicals to follow the non-ferrous metals lead and to electrify their processes. So I think the commission needs to be careful that if electricity prices become too expensive, then the whole kind of 2050 agenda and the whole electrification for decarbonization agenda. Kind of very much gets sidetracked.

Richard Sverrisson, Editor-in-Chief, Montel: 16:55

One intervention that chem has put forward here. If I'm, if I understand correctly, Alexander is, you've suggested limiting power exports from Norway in situations of such high prices. Could you expand on this and explain why this wouldn't be a breach of internal market rules?

Alexander Arnesen, Head of Power Procurement, Elkem: 17:11

Yeah, it's the kind of statements that are shared to make headlines, especially especially in Norway. Lemme just under the line the fact that we've, we feel we support power exchange between countries. That includes export, of course. It's a great benefit to both countries that exchange power, especially when you connect power systems that are different like a weather based power system like we have in Norway with countries around us that that have a larger degree of thermal energy. So again, power exchange, it's generally, it's a good thing. It's of a mutual benefit, but what we are concerned about now is the power balance in Norway. And that's, it's a long-term issue and it's a short-term issue and long-term we have to make sure that the new power production keeps up with a new consumption. There are a lot of initiatives in Norway going on these days with new industries that are planning to come online and a lot of them are gonna consume a lot of electricity. So if you're gonna realize that, and if that's gonna happen, then we need to make sure that the production side keeps up. Because if not, then power prices are gonna spiral a lot to outta control. And as Cillian mentioned, the key to the green transition is to have ful and cheap green electricity. So I think. That's important. And the other thing that we worried about is of course right now the power balance short term. So we have a situation where we have low reservoir fillings in Norway, record low in, in southern Norway. And in that situation we keep. Exporting power outta the country, and we'll start exporting even more today with a new cable to the uk so there's power flowing out. It seems that the regulatory authorities think that as long as we have interconnectors with other countries, it's not going, we're not gonna have a problem because if we have a shortage in Norway, we can just reverse the flow and start importing from those countries. But what we are worried about is the fact that those countries now also have weather based power systems. And the weather is the same in, in all countries around the north sea basin. So when it's cold and no wind and dry in Norway, it's also, there's also no wind in UK and also not in Germany. It might be that they will simply not have any power to send to us when we sit here in, in February with empty reservoirs. So that's the situation we're worried about.

Richard Sverrisson, Editor-in-Chief, Montel: 19:18

Just referring to the power cable, we are recording on, on, on Thursday morning when the, that the North Sea link was set in commercial operation and with some analysts expect almost 10 terawatt hours of exports over the winter. So maybe that could add to the tight balance there. I want to move the discussion on. Onto renewable power purchase agreements. We're in this very high price scenario. Are they sparing a drive to PPAs or a drive to decarbonize? What do you think here, Cillian?

Cillian O’Donoghue, Energy and Climate Change Director, Eurometaux: 19:46

Yeah. I think about PPAs. I think the first thing to say is as a sector, we always have a preference for kind of, as Alex said, medium long-term PPAs. It's, the electricity is 40% the cost. So we like to lock that in. When we speak, I think it's important to distinguish between renewable PPAs also and carbon free PPAs. So renewable PPAs, what we generally mean is maybe wind and solar and carbon free. You include hydro nuclear. That's I know it's terminology we're going through here, but it's important distinction. So what we see is. The commission strategy of 2050 says it'll have 85% wind and solar by 2045, so 85 so that's a huge number. So that's a revolution in electricity market. Looking ahead as industry, we obviously have to adopt and we have to say, okay, if this is the way the European electricity market is going to go. We're based old consumers, so your aluminum ware produces 24 7, 3, 6, 5 days a year. We're based old consumers. We need to find a solution between the kind of intermittent renewables and the base old consumers. So that's what we're looking into and kind of various companies are trying to find solutions. What I would say is it's somewhat mixed success, I think in the Nordics. We are seeing big, long-term PPAs with wind power, so projects in Sweden and Norway. But obviously in Norway you have, and Sweden you have good market conditions and in particular the hydro can act as a battery. However, we do see challenges beyond the Nordic markets and we're trying to find solutions there. Nick's company Linus are looking into kind of trying to sign renewable PPAs as well. And he can maybe elaborate a bit on what they're doing in Greece, but what I would say is finding a solution between the base load, real electro intensive, and the intermittent wind and solar. That's gonna be a major challenge going forward. And I think we definitely need the member states and the commission working together. To try and find some solutions here.

Richard Sverrisson, Editor-in-Chief, Montel: 21:43

Yeah, just to be clear, we're talking about PPAs for the electricity intensive industry here.'cause PPAs, corporate PPAs are booming in some parts of the, some parts of Europe and the globe even. But Nick, could you elaborate on a solution that, that people are looking at in Greece?

Nick Keramidas, EU and Regulatory Affairs Director, Mytilineos: 21:57

Sure. First things first, I'd like to say that indeed as you rightly mentioned, Richard, there is a a sort of a boom in terms of the PPAs signed throughout the globe. But when you look at the figures, the actual figures, for instance, in Europe, we are looking at roughly 10 gigawatts of corporate PPAs having been signed. So the number, despite all the publicity surrounding it, is not. Huge. It's not something really considerable. We need to identify the barriers and we need to look at the economics of REST PPAs as well. There is a sort of a misconception out there that for instance, rest PPAs will provide a cheap, stable price for electro intensives in the long run. Immune, let's say, of carbon cost and so on, so forth. Actually, the reality is that. Rest PPAs four mature technologies that have achieved what we refer to as market parity, actually reflect market prices. So basically you can't just go to rest developer and ask for a strike price at the rest PPA, that's completely irrelevant to market prices. They expect to either sell the electricity to the industry. Under a long-term contract or sell it on the market. So basically what is a price that more or less reflects market prices as well. That said one of the huge challenges ch faced by the electro intensive industries has to do with this mismatch as Cillian rightly mentioned in terms of the profile. We've got stochastic generation on the one hand, and you've got base load 24 7 operation on the other hand. What Greece is trying to do right now, and if my intelligence is correct, they're right now in the process of communicating this proposal to the commission for approval is establishing, so to speak, a green pool. That is to say a a virtual pool where electricity will be aggregated by. Rest produced and financed through corporate PPAs by electro intensives and the shaping part of the cost. This firming and shaping part of the cost will be to some extent compensated by state funds. CO2 revenues basically. So this will allow the electro intensivess on the one hand to come forward and finance the addition of new renewables capacity on merchant terms to the system, while at the same time mitigating part of the risk that has to do with the shaping exercise, which is a huge problem. And having looked at the figures and the reality in most of continental Europe, it's one of the key barriers that have prevented electro intensivess from coming forward and signing those PPAs

Richard Sverrisson, Editor-in-Chief, Montel: 24:37

For those listeners who may be unfamiliar with the term arrest, that's renewable energy sources and abbreviation, but, absolutely Nick, that sounds a very interesting idea. I think it'd be interesting to see how much traction that gets in the commission in the EU executive. We're running a bit out of time, gentlemen, but I'd like to round off with a discussion about the guarantees of origin. Now, I think, this is a tool used to verify and certify that production. Renewable energy is actually green, but I know industry has some strong feelings in this matter. Could I ask you Cillian to, to explain why you are quite skeptical of the guarantees of Origin Market?

Cillian O’Donoghue, Energy and Climate Change Director, Eurometaux: 25:13

Yeah. The first thing I would say is what we want is a good system to certify scope to emissions. I think we all agree we need that. The guarantees or origin system, the way it's been implemented and the way it works now, in reality, it leads to a lot of greenwashing. If I give a very simple example, if you look at Iceland, there's no interconnectors as we all know, but there's part of the European market. The producers there can obviously sell their guarantees of origin to let's say, Poland. And what happens then, if you use that as the accounting system, then you can say that aluminum producing Iceland is not green because the guarantees of origin had been sold. That's just giving one example, which shows perverse impacts. We want a solution on scope two kind of certification. And we do see major weaknesses in the guarantees origin system, what we can replace with and what the best way to certify Scope two, we don't yet have a simple solution. I think we need something, but if I'm being very honest, we don't have one simple solution on the table today.

Richard Sverrisson, Editor-in-Chief, Montel: 26:08

Cillian, could you just explain what Scope two emissions are for the, for those listeners who are un unfamiliar with that term?

Nick Keramidas, EU and Regulatory Affairs Director, Mytilineos: 26:14

Sorry. Yes, of course. So you have basically scope one, scope two, and Scope three emissions and I'll focus on Scope one and two. Scope one is your kind of your direct emissions, so on your plants. Scope two is your electricity, so all the electricity you consume. That's you call your indirect emissions Scope two emissions. And for a very electro intensive sector, like non-ferrous metals, scope two emissions are much greater than Scope one. So for aluminum, they can be sometimes up to six times greater can be your scope two emissions compared to your scope one.

Richard Sverrisson, Editor-in-Chief, Montel: 26:43

Thank you. Have you got something to add here? Alexander, particularly the views of industry about guarantees of origin and how you can safeguard against the kind of greenwashing that that that Cillian mentioned.

Alexander Arnesen, Head of Power Procurement, Elkem: 26:55

So we are not really big proponents of the guarantee origin system chem as a company, we, we seek to have our industrial production in countries where there is renewable power available. So that's in Norway, Iceland, south America, and Malaysia and so on. We think that's the most appropriate method to, to track the scope to emissions. And it's also the only way you can do it on a global scale because the guarantee of origin system is applies to Europe only. But to the degree that we will use the guarantee of, or origin system or that European industry will use it I think it's important to link the guarantees of origin with the actual physical power consumption as closely as possible geographically and also in time. I think that will lend more legitimacy to to the system as such.

Richard Sverrisson, Editor-in-Chief, Montel: 27:43

So you would support moves to create 24 7 tracking system for renewable energy?

Alexander Arnesen, Head of Power Procurement, Elkem: 27:49

I won't support it too much. That has to do with guarantees of origin. But if if it's one way to improve the system. It that's the case.

Richard Sverrisson, Editor-in-Chief, Montel: 27:56

Joy, the proponents of guarantees of origin would say that a megawatt of green energy is better than no megawatt of energy, but Nick, would you have anything to add here to this discussion?

Nick Keramidas, EU and Regulatory Affairs Director, Mytilineos: 28:05

What is important looking forward and taking into consideration the fit for 55 targets is to ensure additionality basically, and this is exactly what the proposal I you mentioned earlier, the green pool proposal is seeking to ensure, so adding new capacity to the system and reflecting that electricity that's being added to the system. In the PPAs. Hence whether it's gonna be a geo system geo-based system that provides this certification for the renewable electricity produced and backed by the PPA or not. That is less important. The issue is, let's say a bundled system of guarantees of origin we're in, you can actually trace. The electricity, that's where it's being produced and where it's being consumed. So I think that what Cillian rightly mentioned already from the get go is absolutely valid that the way the geo system has been implemented in Europe has led to considerable greenwashing and we are not big fans of greenwashing. We, and we don't think that's gonna contribute to actually meeting the targets.

Richard Sverrisson, Editor-in-Chief, Montel: 29:09

Gentlemen, thank you ever so much for a fascinating discussion. On how industry views this high price environment and some of the concerns you have or many of the concerns you have, but also some of the solutions you've put forward to mitigate the exposure that you have to these high prices.'cause you're in a very important part of European industry, thanks once again gentlemen.

Alexander Arnesen, Head of Power Procurement, Elkem: 29:31

Great to be here. Thanks.

Nick Keramidas, EU and Regulatory Affairs Director, Mytilineos: 29:31

Thank you very much, Richard. Thanks Montel.

Cillian O’Donoghue, Energy and Climate Change Director, Eurometaux: 29:33

Thanks a million.

Richard Sverrisson, Editor-in-Chief, Montel: 29:34

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