Feldmuehle switches fuel, Cepi warns on gas crisis

Reels of finished product at Feldmuehle: fuel switch secures competitiveness
Reels of finished product at Feldmuehle: fuel switch secures competitiveness

German papermaker Feldmuehle is switching fuel from gas to light heating oil at short notice due to the gas supply crisis, while paper federation Cepi has warned about possible disruption to paper and packaging supplies if mandatory consumption cuts are enforced in the EU.

Feldmuehle said it was taking rapid action to switch to light heating oil as fuel for steam generation at its Uetersen mill, which makes paper for labels and packaging. 

The €2.6m (£2.17m) investment will be financed by an extraordinary shareholder contribution. 

In a statement, Feldmuehle said the move would “ensure the continued operation of the site in the event of a worsening gas shortage”.

“This step also secures the competitiveness of Feldmuehle in the face of the current sharp rising gas prices,” the firm stated. 

Separately, Cepi  (the Confederation of European Paper Industries), has responded to the Winter Preparedness Package released by the European Commission last month.

The package aims to protect EU citizens and economies from the impact of disruption to Russian gas supplies.

CEPI said that the pulp and paper industry had a fundamental role as a provider of critical products, and called on member states to consider entire value chains when responding to the crisis. 

“As its manufacturing partly depends on gas, possible disruptions in the industry’s gas supply would affect the entire logistics of the EU, availability of paper packaging for food and pharmaceuticals, as well as essential hygiene products,” CEPI stated.

“In many places, stopping the provision of gas to paper mills would also mean less heat available to district heating networks supplying thousands of people.”

CEPI also pointed out that recycling operations in the paper industry are “almost entirely based on natural gas”. 

“Restricted gas supply would potentially disrupt related waste management operations and Europe’s leading transport packaging value chain supplies, which rely to a high degree on recycled content.”

CEPI called on national governments to ensure that critical industries, such as pulp and paper “are able to renew gas contracts towards the end of the year at an affordable price”. 

It also urged governments to mitigate the pressure on gas markets before mandatory cuts needed to be enacted. 

“To lower natural gas consumption, Cepi recommends starting curtailment from low-efficiency installations producing electricity or heat only.

“Combined heat and power generation, also known as CHP or cogeneration and dominant in the pulp and paper industry, uses natural gas in a highly energy efficient manner and is also the most climate-friendly choice.”

Russia supplied around 40% of the EU’s natural gas and 27% of its imported oil last year. Germany, Europe’s biggest economy and also its biggest papermaker, imported 55% of its gas from Russia prior to the invasion of Ukraine. 

Germany entered phase two of its three-phase emergency gas plan in June. Phase three, if implemented, would involve rationing and likely shortages for industry.

Packaging giant Smurfit Kappa also said it would likely cut production by 30,000-50,000 tonnes during August.

Speaking to financial analysts, CEO Tony Smurfit said: “Our stocks are already high enough and with the current price of energy there’s absolutely no sense whatsoever to make stock.”

He said that some other manufacturers were taking downtime and selling their energy hedges at a profit. 

In March the Confederation of Paper Industries (CPI) warned that UK paper industry jobs and supply chains were at risk due to the energy price crisis

Last month Portals announced the shock closure of its historic Overton banknote paper mill, with high energy prices a contributory factor.