Habeck wants industrial electricity price: That’s the stuff for the next traffic light Zoff

Economics Minister Robert Habeck is currently having a concept drawn up to relieve the energy-intensive industry due to the high electricity prices. How this “industrial electricity price” should look like is largely unclear. But finance minister Christian Lindner has already made it clear that he doesn’t believe in the plan. ntv.de answers the most important questions about the latest apple of discord in the traffic light coalition.

What is an industrial electricity price?

A subsidized electricity price for energy-intensive industry. You would be able to obtain cheaper electricity for a limited period of time.

Why?

In a global comparison, Germany has high electricity prices. Electricity for industry costs an average of 20 cents per kilowatt hour in Germany. This is a competitive disadvantage for energy-intensive companies because foreign competitors can produce more cheaply. In addition, this increases the incentive for German companies to relocate production abroad – for example to the USA or Asia.

Where did the idea come from?

From the Federal Ministry of Economics and Climate Protection. Department head Robert Habeck has announced that his ministry will present a concept on how the electricity price for industry can be capped. He called “four or five years” as the period for the subsidies.

The calculus: Due to the expansion of renewable energies, electricity prices in Germany should soon drop noticeably. Until then, the price for the energy-intensive industry should be reduced in order to prevent migration.

But isn’t the price of electricity already capped?

Yes. Energy prices had shot up against the background of the Russian invasion of Ukraine. The federal government had therefore introduced the electricity price brake, which will only apply until spring next year. Energy-intensive companies have to pay a maximum of 13 cents for 70 percent of the previous year’s consumption. In addition, the current market price is due. The industry considers the conditions for getting cheap electricity to be too bureaucratic. So far, the electricity price brake has hardly been used by large companies. In the meantime, electricity prices have fallen again, but they are still significantly higher than before the robbery.

When will the new concept be presented?

There is no date yet. Originally, the concept was to be worked out by the end of the year. However, the Ministry of Economic Affairs recently said that the proposal would be presented “soon”.

And with what mechanism should the price be capped?

That’s not decided yet.

How is this supposed to be financed?

That too is unclear.

What do the coalition partners say?

It’s like so often lately in the traffic light coalition. The Greens are for it, the FDP is against it. And the SPD maneuvers in between. While SPD co-leader Lars Klingbeil and the so-called Economic Forum of the Social Democrats consider the industrial electricity price to be a good idea, Chancellor Olaf Scholz says vaguely: “We have to specifically discuss discounted electricity for the economy.” On the other hand, Finance Minister and FDP leader Christian Lindner is clear: there is no leeway in the budget for such plans.

How much should the price be capped?

The Ministry of Economic Affairs is silent on this. In the SPD, a range of five to ten cents per kilowatt hour is mentioned. The Association of the Chemical Industry has in mind a price of four to six cents. There is “no alternative” to this, said managing director Wolfgang Große Entrup to the editorial network Germany. At the beginning of March, his association had asked for a price of five to ten cents. The steel industry would also like a price of between four and six cents.

What speaks against it?

While the energy-intensive industry gets artificially cheap electricity, others – such as taxpayers – have to pay for these subsidies. In addition, an industrial electricity price increases the competitiveness of the companies concerned. At the same time, however, it becomes a competitive disadvantage for others. The Association of Family Entrepreneurs, for example, thinks nothing of the project. “What at first glance promises relief from the high energy prices turns out to be a huge distortion of competition to the detriment of small and medium-sized businesses,” says Marie-Christine Ostermann, president of the association. In order to maintain a competitive industry in Germany, the overall conditions would have to be improved.

An industrial electricity price also means that those who consume the most electricity will be relieved for years – and the high demand will drive the price up. These subsidies therefore contradict the principles of the market economy, since they override price signals. This means that while high prices increase the incentive for industry to switch to climate neutrality, artificially low prices reduce exactly that.

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