Germany should bet on uniform CO2 price instead of industry subsidies – economic institutes
Clean Energy Wire
Germany should focus on a uniform carbon price for a cost-efficient transition to greenhouse gas neutrality instead of subsidising energy costs for specific groups, said the country’s leading economic institutes.
“A sustainable energy policy focuses on expanding the supply of environmentally friendly energy and ensuring the stability of energy supply, not on subsidising the energy demand of individual consumers, as is the case with the industry power price,” they said in their joint economic forecast. “The energy transition suffers from a lack of strategic coherence.”
To improve heavy industry competitiveness while pushing decarbonisation forward, the government is drafting policies including electricity subsidies for large consumers, known as the industry power price. The European Commission approved the state aid scheme at the end of June, but it set tight guardrails, such as limiting relief to 50 percent of annual consumption. Industry associations said this would significantly blunt the scheme.
Carbon pricing is already a key climate policy instrument in Germany, where the energy and industry sectors are covered by the European Union Emissions Trading System (EU ETS), and transport and building emissions by a national CO2 price. These sectors will also fall under a new EU trading system (EU ETS 2), due to take full effect by 2027.
