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Germany is home to a thriving heavy industry sector and may resort to electricity subsidies to keep industry in the country. Reporting from Clean Energy Wire indicates that Germany is currently considering several proposals that would cap the costs of energy for industry participants. However, those benefiting from the subsidy would have to commit to decarbonization and keeping their operations in Germany. The article states that:

“Companies which qualify for the subsidies would be guaranteed electricity for 6 cents per kilowatt hour, for 80 percent of their consumption until 2030. This would require 25-30 billion euros in state funds. The proposal was welcomed by industry as ‘a clear game changer’, but remains controversial among policymakers and economists. There are also EU concerns about unfair competition.”

The piece goes on to say that the 6 cents per kilowatt hour plan is only one of several plans being floated by officials. While companies and trade unions generally back such a deal, there are considerable political obstacles to its implementation. The EU is concerned that Germany’s energy subsidies might compromise fair competition within the Union. Any potential power subsidy plan would need Union approval which may be challenging considering that the EU has its own plans to decarbonize heavy industry. Even without a power subsidy plan, Germany is still working towards Carbon Contracts for Differences (CCfDs) which would provide money to facilitate climate-friendly production in heavy industry. Political “solutions” to climate matters will almost certainly create additional confusion, consternation and uncertainty for businesses trying to make long term plans.

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The Editor

Zachary Barlow is a licensed attorney. He earned his JD from the University of Mississippi and has a bachelor’s in Public Policy Leadership. He practiced law at a mid-size firm and handled a wide variety of cases. During this time he assisted in overseeing compliance of a public entity and litigated contract disputes, gaining experience both in and outside of the courtroom. Zachary currently assists the editorial team by providing research and creating content on a spectrum of ESG… View Profile