20 Jul 2023, 13:12
Benjamin Wehrmann

Finance ministry advisors reject plans for lowering industry power prices in Germany


Plans by Germany's economy and climate ministry to lower industry power prices with subsidies should not become reality because this strategy could prevent necessary industry transformation by keeping unviable companies alive, according to the scientifc advisor council to the finance ministry. “During times of tight budgets and in light of the necessary efforts regarding renewable power expansion, we recommend to not introduce an industry electricity tariff,” the economists said in a statement seen by business newspaper Handelsblatt. Green economy and climate minister Robert Habeck had proposed to cap the power price for companies in competitive and energy-intensive industries at six percent per kilowatt hour until 2030 for about 80 percent of their demand. The measure has been estimated to cost the state some 30 billion euros. However, the finance ministry’s advisors said the price rebate could create a situation in which “necessary structural adaptation processes do not take place.”

A different option would be to completely abandon Germany’s electricity tax, the advisors said. Finance minister Christian Lindner, from the pro-business Free Democrats (FDP), had also criticised his cabinet colleague’s idea, arguing that the regulatory conditions for businesses “should be improved across the board” and taxes on power and energy should be reformed before new subsidies are contemplated. Chancellor Olaf Scholz has so far neither endorsed nor ruled out that Habeck’s proposal could become government policy, despite voicing concerns that EU subsidy laws could significantly limited the scope of intervention. “But we may take a look at it,” Scholz said.

Energy-intensive companies in Germany should receive subsidies to lower their electricity costs if they promise to decarbonise and to stay within the country, Habeck said earlier this year. The minister at the time said he is “aware of the concerns” that such a state aid measure could irk neighbouring EU countries with less financial leeway. Habeck also announced plans to introduce so-called Carbon Contracts for Difference (CCfDs) that compensate energy-intensive companies for the extra costs of climate-friendly production.

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