BERLIN, May 22 (Reuters) – Germany plans to allocate around 4 billion euros ($4.40 billion) a year to subsidize electricity prices for energy-intensive industries in a bid to encourage and discourage an industrial shift away from fossil fuels to relocate abroad.
The government introduced price caps for electricity and gas last year to protect industry and households from rising energy prices. However, companies in Germany say that electricity prices are still too high.
“We want the industry … to stay at home in Germany and have a transformation perspective. This is what the industry electricity price is intended for,” said Economics Minister Robert Habeck at a press conference on Monday.
The government is discussing the details of the subsidy, which the Treasury Department rejects, but Habeck said the subsidy could limit prices to 6 cents per kilowatt-hour (kWh) and cover 80% of industrial companies’ consumption.
“This price is calculated on the basis of the average exchange electricity price and then scaled down,” said Habeck, adding that this would create an incentive for companies to look for cheaper energy prices from renewable energy sources on the market.
The subsidy, which would cost around €25 billion to €30 billion, is due to expire by 2030 and will be funded through the Economic Stabilization Fund (ESF), which was originally launched in 2020 to bail out airline Lufthansa during the pandemic.
Earlier this month, Germany’s finance ministry rejected the economy ministry’s subsidy plan because the budget wouldn’t allow it and existing funds couldn’t be diverted.
Small and medium-sized companies in energy-intensive industries such as metals and chemicals could benefit from the support, he said.
“If we don’t pay that price, we may not have any future industries in these energy-intensive areas of Germany, and that would be a loss,” Habeck added.
($1 = 0.9084 euros)
Reporting by Riham Alkousaa. Edited by Bernadette Baum
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