Power subsidies and refugees: Germany’s governors want Brussels’ help

Power subsidies and refugees: Germany’s governors want Brussels’ help | INFBusiness.com

Germany’s regional chiefs descended on Brussels to seek support on contentious political and economic issues from European Commission President Ursula von der Leyen, who may in turn take the opportunity to ensure their support for her second term.

During a two-day meeting in Brussels on Wednesday and Thursday (6-7 September), 11 prime ministers of the German federal states are set to hold talks with four different commissioners and with von der Leyen, a fellow German.

“The challenge is great. But we want to show that nature conservation, climate protection and growth go hand in hand,” dpa quoted the Commission chief as saying in Brussels on Wednesday.

The regional chiefs come to Brussels with a wish list in hand: A draft paper titled “Brussels declaration of the Länder,” seen by EURACTIV, is set to be adopted in Thursday’s meeting. It contains a list of requests to the EU institutions, including on contentious issues like industry power subsidies and migration.

This week’s gathering is the first of its kind since 2018, when Germany’s regional leaders also met in Brussels ahead of EU elections the following year.

Should von der Leyen aim for a second term at the Commission helm, support from Germany’s powerful states, many of which are larger than the average EU country, is crucial to continue her political agenda.

In all, the six conservative German governors who come from the same political family as von der Leyen are important allies in her potential bid for a second term.

But first and foremost, Germany’s governors are looking for backing from Brussels in their clashes with Berlin.

A special power tariff for industry

For months, German politics has been in a drawn-out row over whether power for industry should be subsidised for a transitional period until cheaper renewables depress prices down to about €60 per megawatt-hour, as politicians hope.

Given that prices tend to be much higher, such a measure is expected to cost tens of billions of euros.

While large parts of the government are sceptical of such a measure, the governors are in favour. Some opponents argue that should rich Germany dole out generous subsidies to its energy-intensive industries, other countries with less fiscal headroom could lose out.

“It must be possible to establish a competitive bridge electricity price for a transitional period, especially for energy-intensive and internationally competitive companies,” the draft of the joint declaration reads.

“Germany’s competitiveness is largely decided in Brussels,” the governor of North Rhine-Westphalia, the CDU politician Hendrick Wüst, told dpa before travelling to Brussels.

It remains to be seen if von der Leye will be willing to meet the governors halfway, but at the very least, it is expected that she will lay out how an industry power tariff can be compatible with EU laws.

“We want to have a conversation,” Wüst noted.

Germany’s energy-intensive industry cheered the move. The chemical industry association VCI called it an “important signal at the right time.”

No slacking on migration

But Germany’s attractiveness as a business location is not the only thing state leaders are worried about.

The regions, along with local authorities, are also in charge of the reception of refugees and have warned urgently and repeatedly that this task is pushing them beyond their financial and administrative capacity.

While the states have been clamouring for financial help from the federal government, which the latter has been hesitant to grant, they came to Brussels with the message that other EU countries should shoulder more of the burden – notably via the EU asylum and migration pact.

In June this year, the EU interior ministers found an agreement on this legislative package, which includes a “solidarity mechanism” for the distribution of refugees between EU countries.

However, the deal has been called into question by Poland and Hungary, and the final compromise between the EU institutions and member states is yet to be reached.

The interior ministers’ decision on the pact “can only constitute a first important step in the right direction if it is implemented consistently,” the German regions’ draft resolution reads.

The paper cautions that “the wiggle room granted in the context of the solidarity mechanism cannot lead to the aim of a solidary system being undermined”.

The version of the solidarity mechanism agreed on by interior ministers foresees that all EU countries have to contribute to the reception of refugees, but that they can choose whether they do this by taking in migrants or providing funding instead.

[Edited by Zoran Radosavljevic]

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