For months, the government has struggled to figure out how to make electricity cheaper for industry. The fear: Large corporations could otherwise migrate. Now there is a concept.
The federal government wants to reduce the price of electricity for the economy through tax reform. According to information from the German Press Agency, the plans include, among other things, a significant reduction in electricity tax for the manufacturing industry and an expansion of the current electricity price compensation for corporations that particularly suffer from high electricity prices. The “Handelsblatt” first reported on the plans.
The electricity tax should therefore be reduced from currently around two percent to the European minimum of 0.05 percent. Not only large industrial groups benefit from this, but also medium-sized businesses.
350 companies that are particularly exposed to international competition and suffer from high electricity prices are to receive additional help. The existing electricity price compensation is to be extended and expanded for five years.
The Federal Cabinet recently decided to provide further relief: the federal government wants to provide a subsidy of up to 5.5 billion euros to partially finance the transmission network costs. In the end, this should also curb the price of electricity. Network charges are fees for the use of electricity and gas networks that are passed on to consumers. All relief is expected to add up to a double-digit billion sum in the coming year alone.
Electricity prices in Germany are one of the highest
The federal government had been arguing for months about ways to relieve the industry of electricity prices. In international comparison, German electricity prices are currently quite high – both for consumers and for companies, some of which require enormous amounts of energy. This is particularly true, for example, for the chemical industry, aluminum plants and manufacturers of building materials.
According to data from the International Energy Agency, industry in Germany pays almost three times as much per megawatt hour as in the USA or Canada. In the EU, Germany is in the middle: electricity is more expensive in Denmark and Italy, but much cheaper in France.
The high price in Germany is due, on the one hand, to the formerly strong dependence on Russian gas. Germany has only a few oil and gas reserves of its own, and hydropower and sun can also be better used to generate electricity elsewhere. Added to this are the CO2 price, taxes and duties.
Federal government fears companies will leave the country
More and more large industrial groups are now thinking loudly about relocating their production to countries with lower electricity prices. That could cost Germany jobs. Economics Minister Robert Habeck therefore suggested in May that electricity prices for industry could be artificially reduced through state subsidies. This should happen temporarily until 2030 – until renewable energies are so expanded that electricity prices fall on their own. Cost: around 25 to 30 billion euros.
Little appreciation for a Habeck concept
However, the Green politician’s plans were sharply criticized because only around 2,500 particularly energy-intensive companies should benefit from the low prices. The middle class, many craftsmen and smaller companies would come away empty-handed. There is also the risk of state support for an industry that is not sustainable at all. The “economics” Monika Schnitzer said that this threatened to slow down the urgently needed structural change. Other economists also made similar comments, doubting that electricity would ever really become cheap, even with a significant expansion of renewable energies.
Chancellor Olaf Scholz warned that the expansion of wind and solar energy should not come to a standstill. It’s also about companies that make a lot of profit. Finance Minister Christian Lindner (FDP) emphasized: “There is no financing of this magnitude available.” He brought up the idea of reducing the electricity tax – for everyone “from Bafög recipients to pensioners, from craft businesses to the manufacturing industry”.