Germany given green light to combine industry energy subsidies for 2026

Germany will be able to support energy-intensive industry by combining two subsidy schemes throughout 2026 after receiving a green light from the European Commission, economy minister Katharina Reiche told business daily Handelsblatt. The agreement allows companies to benefit both from a temporary lower industrial electricity price and a power price compensation scheme that reduces their exposure to carbon pricing, which was previously not possible.

Germany’s industrial production has declined in recent years, with the sector facing weak demand, increasing competition from abroad, high import tariffs, as well as the costs of transitioning to climate-friendly production.

“The Commission has accepted our argument that this step is necessary given the enormously high energy prices caused by the current crisis,” Reiche said, referring to the energy price spikes caused by the Iran war. For 2027 and 2028, companies would only be able to benefit from both subsidy schemes simultaneously if they apply them to different industrial processes. The additional relief would cost the government around one billion euros, Reiche told Handelsblatt. 

The agreement drew criticism from energy think tanks for lacking a longer-term structural approach. “The industrial electricity price is a good measure to provide short-term relief for businesses. In the long term, however, it is merely a drop in the ocean,” Agora Energiewende head Julia Bläsius told Handelsblatt. In a policy brief, the Centre for European Economic Research (ZEW) earlier this year argued that the industrial electricity price would mainly benefit established large-scale consumers. Smaller companies would face high administrative hurdles and would therefore be less likely to apply for the subsidies.

German industry associations had previously criticised the European Union's conditions for member states seeking to subsidise companies' electricity costs, arguing they are too strict and insufficient to guarantee the bloc’s industrial future. The EU’s Industrial Accelerator Act, proposed in March 2026, is aimed at addressing the challenges faced by traditional, energy-intensive industries and clean tech sectors amid global competition and geopolitical tensions.