How the Energy Crisis Threatens the Future of the Glass Bottle – In conversation with Adeline Farrelly
Since 2012, European container glass production has grown by 18.6%—at an average growth rate of 1.7% per year in 2021. The European container glass industry produced more than 83.3 billion bottles and jars for both the European and global markets and announced the highest production growth ever recorded for food and beverage glass packaging.
That’s a situation that was already causing disruptions through the fine wine supply chain with many producers around the world, depending on European bottles, having to order stock 18 to 24 months in advance.
But disruption doesn’t end there.
What is happening includes soaring gas prices, because by September the cost was 15 times its pre-crisis level—making it 10 times higher than prices in the USA and well above the prices in Asia. Potentially, a number of industrial plants will shut their doors or reduce production in Europe in the coming weeks, with severe impacts along the supply chain.
Finally, as if this wasn’t enough, the EU will debate its new Packaging Waste Directive that, if brought into law, could change the appearance of fine wine bottles. How can wine producers prepare for what’s coming?
ARENI Global spoke to Adeline Farrelly, Secretary General of the Brussels-based European Container Glass Federation (FEVE). Joining her were Pauline Vicard, ARENI CEO, and Felicity Carter, ARENI Editor.
Felicity Carter
Are the problems at the moment simply a problem of energy prices, or are also there shortfalls in the components that make glass?
Adeline Farrelly
The first thing I would like to say, just to clarify, is that there are no factory closures in our sector in Europe at the moment. Companies are trying to produce despite the fact that we’re in probably the worst conditions we’ve ever had.
To answer your question, we basically have an industry that is using a lot of locally produced raw materials. We are not dependent on very long supply chains. Most of our suppliers are within 300 kilometers of our production sites. The vast majority of the contents in a glass bottle today is recycled content—52%. Nearly 24 million tons of glass produced in 2021.
Obviously, the energy crisis is our biggest issue because 24% of our cost structure is energy costs. So you can imagine that with the cost of energy exploding, it’s 14 times the cost. It’s a huge challenge to our companies to continue to produce, but we are doing so.
The energy crisis is our biggest issue because 24% of our cost structure is energy costs. So you can imagine that with the cost of energy exploding, it’s 14 times the cost. It’s a huge challenge to our companies to continue to produce.
Adeline Farrelly, Secretary General of the European Container Glass Federation
Felicity Carter
Many industries are ramping up production to try to get ahead of energy prices rising. Is that also happening in the glass container industry?
Adeline Farrelly
Our furnaces are running at capacity. It is important to understand that we’re a continuous process. We run a furnace for 15 years, 365 days a year. It’s not as if we would just sort of ramp up suddenly to try and build up stocks and then ramp down. We have to use our furnaces at maximum capacity all the time, because that’s where the efficiency is. If we’re not selling the glass, it goes into our stocks. So we usually have very large inventories.
Pauline Vicard
Why do you need a continuous process? Why can’t you stop a furnace?
Adeline Farrelly
A furnace needs to maintain glass in a liquid state—it’s almost like lava. So you can’t turn the switch off, because when it cools down the glass becomes glass and destroys the furnace. You lose the whole industrial asset.
A furnace needs to maintain glass in a liquid state—it’s almost like lava. So you can’t turn the switch off, because when it cools down the glass becomes glass and destroys the furnace. You lose the whole industrial asset.
Adeline Farrelly, Secretary General of the European Container Glass Federation
Pauline Vicard
Where do we produce glass in Europe? Are there countries that are more exposed to the crisis?
Adeline Farrelly
We have 162 plants across 23 countries in Europe. The countries that face the biggest challenges are the countries that are dependent on Russian natural gas—Germany and the Netherland, but other countries also.
Pauline Vicard
To stay on gas for second, if I understand correctly, not all sources of energy are suitable to heat the furnace. Could you use, for example, solar panels?
Adeline Farrelly
That’s a good question. You can use any source of energy if you have the furnace technology to do that. The furnaces that we have today serving the food and beverage sector are, by and large, natural gas-based furnaces. Those furnaces cannot just switch tomorrow to electricity or biomass or whatever. We need to do a transition and, and that’s what we’re working on.
Now what we can do is we can increase electric boosting. There are already electric furnaces in our industry, but for very small production runs. The idea is to go towards electrification, so replace 80% of our natural gas that we have today with electric furnaces, based on renewable energy.
Pauline Vicard
Are there factories that recycle, and factories that produce? Do they use energy in the same way, and are they impacted by prices the same way?
Adeline Farrelly
Recycled glass is post-consumer glass. That glass gets collected by a waste collection company and it goes to directly to a glass processor or a glass recycler and that glass recycler takes off the labels, takes off the contaminants, all that sort of stuff, and crushes the glass into little pieces. They send that directly to our factories and we put that glass directly into the furnace that melts with the other raw materials.
Felicity Carter
Is recycled glass the same quality as brand new glass?
Adeline Farrelly
It’s exactly the same quality. That’s one of the important messages about glass—recycling glass can be recycled over and over again, infinitely, without losing its properties. .
Felicity Carter
What does this mean for the recycled glass market at the moment? Does this mean that recycled glass is becoming more valuable?
Adeline Farrelly
Yes. There is a huge demand from our companies from more recycled glass and there isn’t enough supply. That why we launched “Close the Glass Loop” a couple of years ago, which is an initiative with the recyclers, but also with municipalities, with cities, with the brands, with their customers. We need everybody working together to collect the maximum amount of glass that’s possible, because most of that glass then can be reprocessed and put back into our furnace. It’s the right thing to do from a sustainability point of view, but there’s also an economic interest in it. If you use recycled glass in your furnace, you use less energy because it’s like a re-melt. You don’t have to transform sand into a liquid. It’s already transformed, so it’s easier to melt.
And on top of that, there are no CO2 emissions. When you use virgin materials, you have carbonates as well. When you melt them, they release carbon and it associates with oxygen, and that’s where you get your CO2 emission—80% of our CO2 emissions comes from the fossil fuels we use to melt glass. And 20% is coming from the raw materials we use. So if we can switch the raw materials to recycled glass, we can address that 20%. If we switch from natural gas to electricity from renewables, we can also eliminate that 80%.
Felicity Carter
Does the colour of glass have any impact on the recycling? We use lots of green glass in wine. Is that a problem or is that irrelevant?
Adeline Farrelly
No, it’s fantastic. We love green glass.
Felicity Carter
One of the things in wine is that we have huge variation. A lot of wineries want their own crest on it. They want a deeper punt. They want a bigger thickness. Would the wine industry be better off if we had some sort of universal glass?
Adeline Farrelly
That’s a very important question. And I would imagine that most winemakers would like to have their packaging to help them stand out in the shelves, to help them differentiate, to show the region that they come from. Wine shapes and sizes are a very important distinguishing factor for the product. Can you imagine going to the supermarket shelf and just seeing all the same bottles—how do you pick out your wine?
Pauline Vicard
Can I rephrase this question in terms of maybe ease or sustainability of production? Like if we were to have two different bottles shaped for the wine industry, would that save in terms of energy cost?
Felicity Carter
Also, I guess I was thinking that, given this particular moment, would we be better off with a larger production rather than lots of individual, small-batch productions of different things—or is that irrelevant to the production process?
Adeline Farrelly
I wouldn’t say it’s completely irrelevant, but frankly speaking our industry is very experienced in terms of managing the different shapes and sizes. It’s highly engineering based. And so I don’t think it would make that much difference. It’s our job to be efficient. And most of our factories are running at very high level of efficiencies. We’re talking about 98% efficiency.
Pauline Vicard
If I could come back to what you were saying. We don’t know what’s coming, but we know it’s going to be difficult in terms of energy and energy supply. Is there a scenario that, if you had a magic wand, you would make it appear, like a cap on energy price? And are you working on the worst possible scenario, to get your members ready for what’s coming?
Adeline Farrelly
We would welcome a cap on on natural gas, but there are big questions about who will pay for that. To have some kind of predictability in our industry, that’s what we would like to have. Industry hates unpredictability. What we are asking for is first, is that you do not ask us to shut off our furnaces, because we cannot do that without losing the industrial asset. Number two, if we have to make these energy savings, that you discuss with the industries individually, country by country. The third thing we need to have something on is gas. With gas 14 times the price of last year, we absolutely need them to help us.
And the fourth thing is today we have a list of energy intensive sectors that are on a list that is allowed to have state aid. We are not on that list. We’re not on that list because the European Commission decided that we were not electro-intensive enough to be on the list. But we should be on the list because we were very, very close even at the time. The electric industries, aluminium or paper, for example, are getting compensation today. The glass industry hasn’t got a single penny of compensation for all the extra energy costs we’ve had to face.
Felicity Carter
Glass is not simply fun things like beer and wine. It’s also things like medical vials and food, so I’m actually very surprised to hear this. I would’ve thought that the loss—or potential loss—of glass furnaces would be seen as a catastrophic thing for the governments of Europe. Is this because they’re solely focusing on one data point, which is the use of electricity? When you negotiate with people, how aware are they of the stakes you’re talking about?
Adeline Farrelly
They’re definitely aware, but the world has changed so much. Helping electro-intensive industries probably made sense a few years ago. That’s what they wanted to push people towards. Today, we have a war on gas which was never foreseen. I think countries are struggling to know what to do.
Pauline Vicard
So it’s more that the legislation hasn’t adapted to recent change, it’s not that they don’t care.
Adeline Farrelly
It’s new new territory for everybody. But I get the impression that people are quite aware.
Pauline Vicard
I would like to use the remaining time to focus on something slightly different. It’s the new Packaging Waste Directive that the European Commission is going to vote [on in November].
Adeline Farrelly
It’s basically the marketing authorisation to place packaging on the market, but it also provides the objective to ensure that that packaging place in the market is either recyclable or reusable by 2030. One of the big issues is that there is an increase in packaging waste in Europe, every single year.
The review is going to, first of all, define what recyclability is. So lots of people say, “oh, I’m recyclable”, but what is recycling? Is it recycling into a park bench? Is that recycling? People say, “yeah, yeah, it’s great”. But it’s a park bench, and after it’s finished, its material is lost. It goes to landfill, or it has to be incinerated. And that is the point we made earlier about glass—glass is a permanent material that ‘s continually able to be recycled and maintain its virgin properties, every time. So the definition of recyclability will reflect that. In order to claim recyclability, it must be able to go a reasonable number of times.
And what level of recycling do you need to agree on? Is your product 50% recyclable or 80% recyclable? There will also be measures on how much recycled content each packaging should have. As I explained to you, there’s no market failure in glass recycling because there’s a huge demand.
But two things I want draw attention to is over-packaging, because they think this is leading to a big increase in packaging every year. The question then is, what is over-packaging? It’s putting your product into a huge box and the box is only half full.
But there’s also the question: are wine bottles over-packaging if they’re too heavy? Are perfume bottles too heavy? They want to address over-packaging by having a packaging reduction target of between 5% and 10% by 2030. The measure will disallow marketing as a performance criteria for packaging.
Are wine bottles over-packaging if they’re too heavy? Are perfume bottles too heavy? [The European Commission] want to address over-packaging by having a packaging reduction target of between 5% and 10% by 2030. The measure will disallow marketing as a performance criteria for packaging. It means that you would not be able to have different shapes and sizes and designs where that added weight to a bottle.
Adeline Farrelly, Secretary General of the European Container Glass Federation
Felicity Carter
Could you explain what that means?
Adeline Farrelly
It means that you would not be able to have different shapes and sizes and designs where that added weight to a bottle. So a special design that means you’re using more glass than you really need to could be considered overpackaging.
Pauline Vicard
It potentially means that unless we are able to prove that, for technical reasons—like a bottle of Champagne, for example, where there’s seven bars of pressure and you need the extra weight in the bottle—if we can’t prove that, then the argument of consumer acceptance is no longer going to be acceptable.
Adeline Farrelly
Exactly. You would be able to put packaging on the market if it complies with basic performance criteria. But consumer acceptance would no longer be a performance criteria, where you could say, my bottle has a big punt because that’s the tradition of this wine from this region.
Felicity Carter
Oh, I can see some big fights coming, with some regions wanting to protect their you know their traditional ways of doing things. There are some wine cultures that really value extremely heavy bottles. What would that mean for them exporting to Europe? Would they have to fulfill the European specifications, or would European bottles finding themselves competing against heavy-looking bottles from elsewhere?
Adeline Farrelly
If these rules come on the books, then everybody has to comply. So once you put the product on the EU market that they have to comply the same as the EU bottles.
Felicity Carter
You know, one of the, the ways that we waste a lot of glass in the wine industry is actually in glass that’s too thin. We have lots and lots of glassware that’s so delicate that if you’re a restaurant, you’re just smashing it all the time.
Adeline Farrelly
The thicker the glass, probably the stronger it is. But we have this notion called ‘minimum adequate weight’, so we should still be able to have bottles that comply with all the different requirements of our customers. It’s just that the decorations and fancy bits and the embossing could be under threat.
Pauline Vicard
If winemakers want to be involved in that conversation, who do they need to speak to?
Adeline Farrelly
They should speak to the Commission that is, at this very moment in time, drafting the legislation. They need to hear from wine producers. This is a huge threat to the wine sector in Europe. There’s a huge export of these products outside the EU and if you just have to have plain packaging, you devalue your product. We need to advocate for the fact that we need product differentiation—a product doesn’t sell itself. There’s a whole story behind the product and the bottle is part of that heritage.
This is a huge threat to the wine sector in Europe. There’s a huge export of these products outside the EU and if you just have to have plain packaging, you devalue your product. We need to advocate for the fact that we need product differentiation—a product doesn’t sell itself.
Adeline Farrelly, Secretary General of the European Container Glass Federation
Felicity Carter
Yes, I mean when you talk about something like perfume bottles, you’re not just talking about sustainability; these things can be lasting cultural objects too. But going back to this, this need to talk to the Commission.
Are there people talking to the Commission, or are you suggesting we tell people they need to go and talk to the Commission? How do they do that?
Adeline Farrelly
Well, I think that you have an entry point through Comité Européen des Entreprises Vins (CEEV), who is doing that on behalf of the European producers. But I would like good old-fashioned writing an email to the head of the unit responsible for this, to let them know that you are concerned and that you are seeking some reassurance that this will not be the case. And that you will continue to be able to put on the market different types of shapes and sizes and designs.
You are welcome to talk to your own Ministers in the members states, because any country that has a big wine sector should be worried about this. Sometimes it’s helpful to have a voice from the country itself saying, listen, this will endanger our wealth creation.
Felicity Carter
What is the future of glass, in the sense of research questions you are racing to answer? How will glass be different in the future—or is it a product that will always look much the same as it does now?
Adeline Farrelly
The main change will be in the process of how we make glass. We have to rebuild our furnaces every 10 to 15 years, and we have to refurbish them every year. Ten percent of the industrial assets get refurbished or replaced, and every single time we do that, there are always new technologies that make the production much more energy efficient. What will a glass bottle look like in future? Probably lighter than it is today. As light as plastic? No, I don’t think so.
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