Federal Economics Minister Robert Habeck and SPD leader Lars Klingbeil want to relieve German industry with cheaper energy. In the economy there is intensive talk about an industrial electricity price, Habeck told the editorial network Germany. “And I think we have to do that.”
At the same time, the Green politician made the following restriction with a view to the coalition partner FDP and its chairman, Federal Finance Minister Christian Lindner: It costs money and that requires agreement in the federal government. Because cheap industrial electricity is to be financed with tax money.
In the “Frankfurter Allgemeine Sonntagszeitung”, Klingbeil called for the discounts to be launched quickly. “Some people are talking about the year 2030. But it’s about the next twelve months.” It’s still unclear how much industrial electricity will cost in Germany. The SPD chairman said: “You have to see whether that’s 5 or 7 cents per kilowatt hour.” For comparison: Many private consumers are now paying well over 30 cents.
Economist Fratzscher does not believe in tax-financed industrial electricity prices
One thing is certain: Germany is at the top of the world when it comes to electricity prices. Local companies have to shell out three to four times as much as their French or US competitors. The high electricity prices mean an enormous burden, especially for energy-intensive sectors such as the steel or chemical industry.
Even before the energy crisis, the German economy was complaining that the high electricity prices were a disadvantage for the location. Trade unions see this as a threat to domestic jobs. So all in all a good idea?
The President of the German Institute for Economic Research (DIW), Marcel Fratzscher, shared ten theses on Twitter as to why this is not the case.
In his view, an industrial electricity price slows down the ecological and digital transformation if it cements old structures instead of allowing industry to be renewed. Fratzscher points out: “De-industrialization is a danger – but not primarily because of high energy costs, but because of a sluggish transformation.” The strength of the business location and the competitiveness of its companies have never been based on cheap energy costs.
“More important are better framework conditions”
According to Fratzscher, the attractiveness of the business location depends only to a limited extent on energy costs. “More important are better framework conditions through less bureaucracy, faster approval procedures, better infrastructure, improvement in skilled workers, etc.” This should be the priority.
In addition, an industrial electricity price thwarts urgently needed energy savings and investments in energy efficiency. “As a result, energy costs will tend to be higher in the medium term and the disadvantages for those who do not receive subsidies will increase.”
Also, the preservation of energy-intensive production in Germany per se cannot justify an industrial electricity price. “More important for competitiveness is innovative strength and the preservation or creation of productive jobs in Germany,” says Fratzscher.
The economic expert also suspects that an industrial electricity price could become extremely expensive. This would result in a lack of funds for other important priorities.
Fratzscher also considers the project to be antisocial: “Companies are to be massively subsidized as a result, citizens, especially those with low incomes, will get nothing, even though they are experiencing massive real wage losses and a reduction in their prosperity in this crisis,” writes Fratzscher on Twitter.
Industrial electricity subsidizes fossil fuels
Fratzscher does not share SPD leader Klingbeil’s idea of financing industry aid from the Economic and Stabilization Fund. “The argument is nonsensical that there is still enough money in the federal government’s economic stabilization fund to finance the costs of an industrial electricity price,” explained Fratzscher. “Because the money is then missing elsewhere.”
The renowned economist makes it clear that a large part of our current electricity does not come from renewable energy sources and will remain so for many years to come. Fratzscher is therefore convinced that an industrial electricity price subsidizes fossil fuels even more.
According to Fratzscher, why parts of the federal government are now talking about the industrial electricity price is probably because it is easier than reducing bureaucracy, creating an efficient infrastructure and setting priorities for the transformation.
Habeck’s State Secretary Graichen wants to present a concept for industrial electricity prices
Nevertheless, the plans are well advanced, at least in the Federal Ministry of Economics. Habeck’s State Secretary Patrick Graichen had announced that he would present a concept for an industrial electricity price this week. He spoke of a price of 5 or 6 cents per kilowatt hour. The energy ministers of the federal states are also in favor of a reduced industrial electricity price.
Agreement also came from representatives of employers and employees. Rainer Kirchdörfer, head of the Foundation for Family Businesses and Politics, said: “Minister Habeck is right when he wants to protect German industry from bleeding to death.” IG Metall boss Jörg Hofmann argued that an internationally competitive electricity price for energy-intensive industry was long overdue .
FDP boss Lindner, however, pleaded in the “Wirtschaftswoche” for “market solutions” such as long-term supply contracts (power purchase agreements). On the one hand, they are intended to offer price guarantees to bulk buyers and investment security to producers of wind power, for example.
CDU leader Merz accuses traffic lights of causing massive damage to the German economy
CDU party and faction leader Friedrich Merz attributes the high electricity prices to the traffic lights. “On the one hand, the supply is artificially reduced with the decommissioning of the nuclear power plants and the restrictions on hydropower and biomass,” says Merz. The expansion of wind and solar energy also takes significantly longer than the traffic light is based on in its plans.
“On the other hand, the demand for electricity is artificially increased by the one-sided commitment to e-mobility in traffic and to heat pumps in private households.” For Merz, it’s no wonder that we have such high electricity costs in Germany.
“But instead of laboriously correcting the turmoil in the electricity market with subsidies from the tax budget, which incidentally has not yet been approved in Brussels, it would be better to expand the supply from all available sources and dampen demand, for example by being open to technology in the country Transport and building sector,” demands Merz.
“But that contradicts the ideological commitments of the traffic light to the electrification of our entire economy,” Merz continued. “Anyone who distrusts the market economy and wants to unilaterally commit companies and private households to a certain technology is becoming more and more entangled in subsidies and social compensation mechanisms for the consequences of his own policies.” This could also cause massive damage to an economy and public budgets right away.
