As energy process soar, Genan reviews how it deals with a dynamic cost structure.
Genan Tackles Energy Challenge
Genan, Europe’s largest mechanical tyre recycler has seen soaring energy process impact upon its business model. As a result, Genan has split energy charges from its process list and will show a quarterly adjusted price scale for energy in addition to the materials cost.
CEO Poul Steen Rasmussen says; “Energy process have been skyrocketing fot quite some time, and at Genan, we have absorbed these tremendous extra costs through 2021. However, we cannot continue down this road. The Circular Economy requires energy so that end of life products can be transformed into new recycled raw materials, and the recycling industry cannot carry the burden alone.
“As or 2022, we thus have to pass part of this bill in the form of a variable energy surcharge.”
Rasmussen continued; “If the skyrocketing electricity prices were to be reflected in these annual adjustments, we would have to implement considerable price increases, the way things look now. Price adjustments would be out of proportion with cost levels if electricity prices were to normalise. Such a situation would not, in our opinion, be justifiable to our customers. Yet, we do not know when things will return to normal
“For the sake of our customers, we have decided to keep energy costs separate from the calculation of our normal price adjustment for 2022 – which will include everything else but electricity. Instead, we will introduce a variable energy surcharge.”
The energy surcharge will be adjusted on a quarterly basis.