Germany’s plan for industrial electricity price faces steep EU challenges - leaked govt report
Handelsblatt
A key plan by Germany’s new government to introduce a subsidised electricity price for industry and revive the sector could be prevented by European Union law, business daily Handelsblatt reported, citing a classified document from the economy ministry.
A discounted industrial electricity price is a core element of chancellor Friedrich Merz’s plan to halt the decline of industry and return Germany to economic growth. Energy-intensive sectors, such as steel, chemicals and glass, are coming under international competitive pressure due to Germany’s comparatively high electricity prices.
It is highly uncertain whether the EU will accept this plan, according to the classified government document, which states: "The implementation of the concept poses significant challenges under EU state aid law." It adds that EU “reservations are significant and the prospects for approval are highly uncertain." A subsidised industrial electricity price would therefore require a change to EU state aid law, according to the article. For it to be successful, the plan must also be implemented as soon as possible. Officials cited in the document urge new economy minister Katherina Reiche (CDU) to send the proposed plan to Brussels within this month.
Industry representatives have long called for industrial electricity price subsidies. Currently, the average electricity price for industry is 16.1 cents per kilowatt-hour. The proposed subsidy could lower that figure to five cents per kilowatt-hour. Former economy minister Robert Habeck (Greens) attempted to implement a discounted industrial electricity price in the previous government but faced resistance from his coalition partners.
The new government formed by Merz’s CDU and the Social Democrats (SPD) enshrined the industrial electricity price in its coalition agreement despite its difficult implementation. Reiche has said that such relief measures "absolutely require cooperation with the European Commission," stressing that the interests of the Commission and Germany must be aligned.
