Germany considers electricity price cap to support industry
German Economy Minister Robert Habeck on Friday unveiled plans to cap electricity prices for energy-intensive industries to protect the sector from sharp cost increases.
According to the plan, the ceiling of €0.06 (approximately US$0.07) per kilowatt-hour (KWh) is to apply until 2030.
It must cover at least 80% of the electricity consumption of a clearly defined group of German companies in energy-intensive industries such as chemicals, steel and glass manufacturing.
How much will the price cap cost?
The price of electricity for non-residential customers averaged €0.18 excluding taxes in the second half of 2022, according to German statistics agency Destatis.
Beneficiaries would see the difference between the market price of electricity and the reimbursed cap, with the total cost of the project ranging between €25 billion and €30 billion, according to the proposal.
Habeck, who represents the Greens in government, is perhaps counterintuitively recommending that the taxpayer subsidize some of Germany’s biggest polluters. He described the proposal as a necessary long-term “bridge” solution until renewable capacity is expanded and prices come down. Otherwise, the government argues, there is a risk that major employers and sometimes systematically important industries will move out of the country.
Energy costs rose sharply after the Russian invasion of Ukraine, while Moscow cut back on critical gas supplies to Europe.
Source: DW
Lori Barajas is an accomplished journalist, known for her insightful and thought-provoking writing on economy. She currently works as a writer at 247 news reel. With a passion for understanding the economy, Lori’s writing delves deep into the financial issues that matter most, providing readers with a unique perspective on current events.