Genan introduces floating energy surcharge as costs increase
The business strategy of Genan, Europe's largest tire recycling company, has been impacted by rising energy costs. As a result, Genan has separated energy charges from its process list and will display a quarterly updated energy price scale alongside the materials cost.
According to Genan’s CEO Poul Steen Rasmussen, energy prices have been increasing for quite some time, and Genan has been absorbing these significant extra expenditures through 2021. The company says it cannot, however, continue along this path. The Circular Economy requires energy in order to transform end-of-life items into fresh recycled raw materials, and the recycling industry alone cannot meet this demand. Rasmussen says by 2022, Genan will have to enact a portion of this bill as a variable energy surcharge.
He adds that if the soaring electricity prices were to be represented in these annual adjustments, the way things seem now, Genan would have to enact significant price hikes. If power prices were to normalize, price modifications would be out of proportion to cost levels. Such a circumstance, in Genan’s opinion, would not be acceptable to the company’s customers. Genan is still unsure when everything will return to normal.
For the sake of its clients, Genan has chosen to exclude energy costs from the calculation of its standard pricing increase for 2022, which will include everything but electricity. The company will instead impose a fluctuating energy surcharge. On a quarterly basis, the energy surcharge will be modified to account for changing energy prices.
Source: official press release by Genan.