For months, Federal Minister of Economics Robert Habeck has been fighting for a state-subsidized, cheaper industrial electricity price in order to prevent companies from leaving. But the Green politician is hitting the ground running, especially with his coalition partner FDP. Chancellor Olaf Scholz (SPD) is also skeptical. A losing battle?
For Habeck, the months-long hanging game has not yet been decided. At an industry conference in Berlin at the Radialsystem cultural center, he said that perhaps the discussions on the 2024 federal budget, which are now entering the home stretch, would provide some clarity. “But I can’t promise that either.” Habeck once again put the chances of there being an industrial electricity price at 50:50.
But is that just optimism? Almost at the same time, Federal Finance Minister Christian Lindner (FDP) rejected an industrial electricity price – again. “There is no financing of this magnitude available,” said Lindner after a visit to the FDP state parliamentary group in Düsseldorf. “It’s simply not financially feasible.”
Months-long dispute over industrial electricity prices
In May, Habeck proposed his concept for a state-subsidized, reduced industrial “bridge electricity price”. The reason is the high electricity prices compared to other countries. In the long term, industry should benefit from cheap electricity from renewable energies. Because measures to achieve this take time, there should be a reduced “bridge electricity price” in an interim phase until 2030. Cost according to the Habeck concept: around 25 to 30 billion euros. According to his ideas, the money for this should come from the Economic Stabilization Fund (WSF) – a special federal fund financed through debt, from which the energy price brakes are primarily paid for.
The unions in particular want an industrial electricity price and otherwise warn of companies leaving the country. “We are already noticing that energy-intensive industrial production is being relocated and stopped,” said the second chairman of IG Metall, Jürgen Kerner, at the industrial conference. “The federal government has been conducting a public debate about the bridge electricity price for months, with no result in sight.” The decision to provide temporary relief for energy-intensive industries is long overdue. No country is as dependent on the economic success of its industry as Germany.
FDP opposes
Lindner warned of a distortion of competition between medium-sized businesses and industry in the event of an industrial electricity price. The FDP also rejects funding via the WSF. Instead, Lindner once again suggested a reduction in electricity tax: “From Bafög recipients to pensioners, from craft businesses to the manufacturing industry, everyone would benefit from this.” However, it cannot be the case that citizens and medium-sized businesses subsidize the electricity price for a few companies. “That’s not fair.” If the traffic light coalition agrees on a reduction in the electricity tax, the financial means for this would be found, assured Lindner. He already has ideas in connection with the so-called climate and transformation fund.
Habeck made it clear that he was not against a reduction in electricity tax – but pointed out that energy-intensive industry is usually already exempt from electricity tax.
The FDP has also suggested another path. The economic policy spokesman for the FDP parliamentary group, Reinhard Houben, said that in order to reduce energy prices for the economy, direct supply contracts between industrial companies and plant operators of renewable energies should be exempt from taxes and other levies. “That would be more effective than an expensive and unfair industrial electricity price.”
Industry calls on government to act
Habeck recently presented an industrial strategy. The goal: Industry in Germany should be preserved in all its diversity, from global corporations to small businesses. The location conditions are changing in competition with the USA, for example, Habeck said on Tuesday and referred to the “Inflation Reduction Act” – a billion-dollar US subsidy program that is also intended to attract German companies to produce in the USA. Germany and the EU could no longer afford to hesitate, said Habeck.
At the conference, he reiterated that the framework conditions need to be improved – that means: less bureaucracy, more digitalization, faster expansion of green electricity, faster planning processes, more skilled workers through immigration.
The Federation of German Industries (BDI) fundamentally welcomes the strategy. But BDI President Siegfried Russwurm also said: “Paper is patient, companies need concrete action.” For example, the government must say what exactly a competitive energy system of the future will look like.
Habeck promised early decisions. The federal and state governments want to discuss a pact for faster planning and approval procedures next Monday. Habeck emphasized: “We will deliver.” However, it seems unlikely that the federal government will “deliver” an industrial electricity price in Habeck’s sense.
