Representatives of energy-intensive industries have urged the government to decide on subsidies for electricity prices, which, while strongly discouraged by economists, will be the point of discussion in Chancellor Olaf Scholz’s discussions with government leaders.
On Friday, leaders of the parties of Germany’s three-party coalition of Social Democrats (SPD/S&D), Greens and liberal FDP (Renew Europe) will meet for the first time after recent state elections saw all parties register losses.
Ahead of the meeting, representatives of energy-intensive industries and trade unions have called to finally decide on a subsidy scheme which would see electricity prices for certain companies reduced, all while keeping them competitive against foreign competition.
“Please take note of the increasingly dramatic economic situation of the energy-intensive industries in Germany,” the letter addressed to Scholz (SPD/S&D) and his ministers reads.
While the debate on a subsidised electricity price for certain industries “has been going on for months without any results,” “the massive cutbacks in local production that can already be observed are acutely endangering jobs and locations,” the representatives of the steel, paper, chemical and glass industries, as well as trade unions, write.
In its bi-annual government retreat in Meseberg in late August, the government had adopted a set of policies to improve the country’s economic situation but disagreed on a subsidy for electricity-intensive industries, which Economy Minister Robert Habeck (Greens) is pushing for.
More recently, Habeck admitted that the economic situation was worse than anticipated and that economic recovery could take longer.
Economists, however, overwhelmingly oppose the introduction of a subsidised electricity price for industries, which they say would be a waste of money and come at the expense of other electricity consumers, prices for whom might go up as a result.
In a recent survey by Ifo Institute and FAZ among 200 economics professors in Germany, 83% responded that they would oppose introducing such a scheme, with only 13% in favour. “When has there ever been so much unity among German economists?” Alfons Weichenrieder, one of the most outspoken critics of such a scheme, wrote on X.
In their joint letter, industry representatives note concerns of distorted competition by arguing that large and medium-sized companies should be eligible for the scheme.
Furthermore, it was “necessary to reduce the electricity tax for all consumers,” they argue, something proposed as an alternative to a subsidy by Finance Minister Christian Lindner (FDP/Renew Europe).
(Jonathan Packroff | Euractiv.de)
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