The German economy ministry plans to subsidise 80 per cent of the electricity cost for energy-intensive companies, in a proposal likely to fuel divisions inside the governing coalition and further alienate European nations who cannot afford such measures.
Under a long-awaited and highly contentious proposal published by Green economy minister Robert Habeck, a large part of German industry would be offered electricity at a subsidised price of €0.06 per kilowatt hour (kWh) until 2030. The plan, which would cost an estimated €25-30bn, is aimed at bolstering German manufacturers in sectors such as chemicals, steel, metal and glass, as well as encouraging European investment in industries seen as crucial to reducing EU dependence on China, such as the production of solar panels and semiconductors.
The economy ministry said that Germany needed to respond to “tough international competition” in these sectors that was “not taking place on a level playing field” due to huge subsidies in China and, more recently, in the US due to Joe Biden’s Inflation Reduction Act (IRA).