Germany Considers Electricity Price Cap to Support Industry

Date: 06 May 2023 - 23:14

News ID: ۱۱۴۷۴۳

BERLIN (DW) - Germany’s Economy Minister Robert Habeck has unveiled plans to cap electricity prices for energy-intensive industries to protect the sector from sharp cost increases.
According to the plan, the upper limit of €0.06 (roughly $0.07) per kilowatt hour (KWh) should apply until 2030.
It should cover at least 80% of the electricity consumption of a clearly defined group of German companies from energy-intensive industries such as chemicals, steel and glass manufacturing.
The electricity price for non-residential customers averaged €0.18 without taxes in the second half of 2022, according to the German statistics agency Destatis.
Beneficiaries would see the difference between the market price for electricity and the cap reimbursed, with the total cost of the project running to between €25 billion and €30 billion, according to the proposal.
Habeck, who represents the Greens in the government, is perhaps counterintuitively recommending that the taxpayer subsidize some of Germany’s biggest polluters. He described the proposal as a necessary long-term “bridge” solution until renewable capacity is expanded and prices fall. Otherwise, the government argues, there’s a risk that the major employers and sometimes systemically important industries relocate from the country.
Energy costs rose sharply in the wake of the Russian invasion of Ukraine, as Moscow dwindled critical gas supplies to Europe.
Germany’s parliament approved a €200-billion energy relief plan in November to protect consumers and businesses from sky-high energy costs through April 2024. The government plans to pay for the scheme using these funds.
The measures had “stabilized energy-intensive industry but we must not squander this achievement,” Habeck said at a press conference.
The new cap would ensure that “critical branches of industry” remained based in Germany and Europe, Habeck said.
The VCI chemicals lobby has already welcomed the price cap in a statement as a “clear game-changer for our international competitiveness.”