Germany allocates 4 billion euros annually for electricity subsidies – Economy Minister

BERLIN, May 22 (Reuters) – Germany plans to set aside about 4 billion euros ($4.40 billion) annually to subsidize electricity prices for energy-intensive industries to support an industrial shift away from fossil fuels and prevent companies from moving offshore.

Last year the government introduced electricity and gas price caps to protect industry and households from rising energy prices, but companies in Germany say electricity prices are still high.

„We want industry to stay at home in Germany and be given the perspective for a change. The industrial electricity price aims for this,” Economy Minister Robert Habeck told a press conference on Monday.

The government is discussing the details of the subsidy, which the finance ministry opposes, but Habeck said the subsidy could reduce the price to 6 cents per kilowatt hour (kWh), covering 80% of industrial companies’ consumption.

„The price will be calculated based on the average transmission electricity price and then calculated,” Habeck said, adding that this would encourage companies to look for cheaper energy prices from renewable energy sources in the market.

The subsidy, which costs 25 to 30 billion euros, is to be phased out by 2030 and will be funded in 2020 by the Economic Stabilization Fund (ESF), originally introduced to bail out airline Lufthansa during the pandemic.

Earlier this month, the German Finance Ministry pushed back against the Economy Ministry’s subsidy plan because the budget did not allow for it and existing funds could not be redirected.

Small and medium enterprises in power-intensive industries such as the metal and chemical sectors can benefit from this support, he said.

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„If we don’t pay this price, we won’t be able to have future industrial sectors in these energy-intensive areas in Germany, which will be a loss,” Habeck added.

($1 = 0.9084 euros)

Reporting by Riham Algousa Editing by Bernadette Baum

Our Standards: Thomson Reuters Trust Principles.

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