The German government has reached a five-year deal on a package of measures to support industry, hit by high electricity prices, in a bid to accelerate efforts to stop the relocation of firms to countries with lower production costs and to support the economy, Reuters and Bloomberg report.
The support package “is extremely good news”, will alleviate the burden of electricity bills by up to 12 billion euros in 2024 alone, Chancellor Olaf Scholz informed.
The measures include a substantial reduction in the electricity tax for companies in the industrial sector, from 15.37 euros to 0.50 euros per megawatt-hour (MWh), as well as additional aid for more energy-consuming companies. The total value of the support package between 2024 and 2027 amounts to 28 billion euros, the Ministry of Economy informed, according to Agerpres.
The Minister of Finance, Christian Lindner, explained that the support will be financed in accordance with the debt brake, included in the German Constitution, which limits the budget deficit to 0.35% of GDP.
Germany’s industry-dependent economy has been in a prolonged slump, with few signs of recovery amid falling business confidence. Among the G7 developing countries, Germany’s economy will be the only one that will contract in 2023, the IMF predicts, and high energy costs have been one of the main brakes on economic activity.
While electricity prices in Germany have moderated since their peak in 2022, they are expected to remain high until at least 2027, when massive offshore wind capacity will be brought online, reducing prices to electricity for large industrial consumers.
“It is important that we have found a way to support the competitiveness of the industry. The more energy-consuming companies can obtain electricity prices below 0.06 euros from 2025, through a series of instruments”, appreciated the Minister of Economy, Robert Habeck.
Although the government introduced a cap on electricity and gas prices in 2022 to ease the burden on households and industry, Germany’s big companies say electricity prices are still too high by international standards.