Robert Habeck had already exceeded the agreed speaking time by far, but he still had to get rid of one thing – despite all the hand signals to please finish. At the annual congress of the CDU business council. The opposite is true: he himself, yes, all political leaders in Berlin, must have the greatest interest in keeping these companies in the country.
And indeed, Habeck has already put the proof on the table: a six-page paper, in which the Vice-Chancellor promises permanently low electricity prices to companies that have to hold their own in international competition despite immensely high energy costs. In the long term, companies should be able to buy cheap wind and solar energy directly from the producers. For the transitional period, when there is not yet sufficient capacity available, the minister is promising a “bridge”: a state-subsidized industrial electricity price of six cents per kilowatt hour, which will be linked to a few criteria and will also offer incentives to save energy.
The SPD and the trade unions don’t have to convince Habeck of the idea, nor do large parts of the Union and the economy. Rather, the most important resister is in his own coalition: FDP leader Christian Lindner. He also emphasizes that “energy must remain affordable”. However, an industrial electricity price is “unfair in terms of distribution policy, economically inefficient and difficult to implement in practice”.
Above all, however, the Federal Minister of Finance is resisting considerations of paying the planned subsidies of an estimated 25 to 30 billion euros by 2030 from the WSF electricity and gas price brake fund, which is still bulging – an idea that Habeck expressly confirmed on Tuesday. Faced with the choice of not touching the WSF now and letting the industry migrate, or supporting the companies and paying the necessary government debt later from the tax payments of the same companies, “I choose the latter,” said the Economics Minister.
Irrespective of the quarrels in the coalition, Habeck was convinced “that we will find a common solution in the foreseeable future, i.e. months.” This is all the more true as he personally “doesn’t lose a single point at all” if his own concept is not implemented one-to-one in the end, but is exchanged for a better one. Ideally, the CDU and CSU should also be involved, after all the companies must be able to rely on the fact that the regulation once made will remain in place if there are other political majorities after the 2025 federal election. The main thing is that the energy-intensive industry can get cheap electricity.
“The industrial electricity price can be implemented quickly”
The industrial electricity price is quite controversial among economists. Veronika Grimm, member of the Advisory Council, is critical; the Advisory Board is better known than the Economic Wise Men. Grimm even considers an industrial electricity price to be a risk for Germany as a business location. “Keeping up non-competitive companies with industrial electricity prices endangers Germany’s future viability,” she says. The electricity subsidy keeps companies alive that have no chance in global competition – and whose employees should rather work in future-oriented industries. “Specialists are extremely scarce,” says Grimm. The industrial electricity price could now bind people to companies that would later have to close anyway.
Economics Veronika Grimm calls for climate-friendly technologies to be promoted instead of putting money into an industrial electricity price.
(Photo: Friedrich Bungert)
If Grimm is right, the industrial electricity price makes the conversion to a climate-neutral economy more difficult. Jens Südekum from the University of Düsseldorf sees it the other way around: the industrial electricity price would accelerate this transformation.
His argument goes like this: The expansion of renewable energies will make electricity cheaper in the future – but until then some companies need a little help. “The six cents are important for planning security.” Companies could already use this to change their production in such a way that they are profitable in the coming green electricity world. “Investment decisions must be influenced now, not in two years’ time,” says Südekum. “The industrial electricity price can be implemented quickly. That’s why it’s the method of choice,” says Südekum.
Grimm is also unsympathetic to Habeck’s obvious desire to signal to the company that he wants to maintain the German location. “Sustainable industry has to be given a signal, but that’s not exactly what you’re setting with the industrial electricity price.” It would be better to use state money to promote climate-friendly technologies. “The requirements of the transformation are huge, we should invest in a targeted manner,” she says. “For many energy-intensive companies, it’s not primarily about electricity, they have to switch to hydrogen. A subsidized electricity price doesn’t help at all here.”
Six cents per kilowatt hour – why is such a low electricity price actually being debated for companies? Many private individuals can currently only dream of such prices. New customers are currently paying around 30 cents, five times the targeted industrial electricity price. “German large electricity consumers have long enjoyed access to significantly cheaper electricity than household customers,” says Georg Zachmann from the Bruegel think tank. The power consumption of industry can be easily planned and does not require expensive distribution networks, so companies can buy energy cheaper than private individuals. However, companies would also benefit from exceptions on the electricity market. For example, the offshore surcharge for the promotion of wind farms can be reduced.* Even without an industrial electricity price, the state is already helping the companies.
“Do politicians then really tell the companies: We can’t save you after all?”
In a market economy things become more expensive when they become scarce. That’s how it is with electricity. Subsidizing consumption for companies now could exacerbate the situation. This is indicated by a study by the ZEW research institute. The economist Kathrine von Graevenitz has examined what happens to companies whose electricity costs rise or fall because of network charges. Their result: A lower electricity price has not made the companies more competitive when looking at sales and the number of employees. Unfortunately, what has increased measurably is power consumption. ZEW researcher von Graevenitz fears that this could be repeated with the industrial electricity price.
Jens Südekum is in favor of the industrial electricity price.
(Photo: Lorenz Mehrlich)
Economist Südekum counters: “You don’t get subsidized electricity to the hilt.” The bridge electricity price should only apply to 80 percent of previous consumption. Minister Habeck’s paper lists other criteria that are intended to prevent wasting electricity. Company representatives in turn complain about these conditions, including long-term location guarantees and adherence to tariffs: They could deter companies from applying for the industrial electricity price.
The state aid for industrial electricity should only be a bridge. But once introduced, some subsidies are surprisingly persistent, Graevenitz warns. She asks how credible the 2030 end date for this state aid really is. “It’s not clear to me that this will then be abolished again,” she says. “There is no evidence that electricity will be cheaper in five years. Are politicians really saying to companies: We can’t save you after all?”
*Editor’s note: A reduced EEG surcharge was mentioned at this point in an earlier version – however, this surcharge was abolished.