BASF: Renewable Surcharge Exemption Removal to Cost EUR400M

BASF AG (BAS.XE) expects to face 400 million euros ($535 million) in additional costs at its headquarters alone should the German government lift an exemption from renewable energy surcharges.

Ongoing negotiations to form a grand coalition in Europe's largest economy carry the "material risk that energy-intense" industries will suffer a setback, the German chemicals company's chief executive, Kurt Bock, tells weekly magazine Der Spiegel in an interview, ahead of publication in its Monday edition.

BASF might move more new projects to the U.S. , where energy is less expensive, he says. Against this backdrop, the company recently decided to build an ammonia plant on the U.S. gulf coast instead of in Germany .

Germany's shift towards renewable energy away from nuclear power requires state guarantees of around EUR20 billion this year alone, but much of the country's heavy industry has been exempt from the bulk of renewable surcharges as the government seeks to protect its competitiveness.

The exemptions for industry will total around EUR4.2 billion this year.

To lower these costs, reforming the country's energy policy is one of the most crucial issues on the agenda of the country's new government, Chancellor Angela Merkel said in her weekly statement Saturday.