Brussels authorizes the granting of 5 billion euros in energy subsidies to German industry

Brussels authorizes the granting of 5 billion euros in energy subsidies to German industry

Germany’s energy-intensive industries will receive subsidies worth €5 billion after the European Union’s competition authority gave the green light to the scheme.

In recent months, energy-intensive industries such as steel and chemicals have faced high electricity and gas prices, slowing production and fueling concerns about Germany’s competitiveness.

“This €5 billion scheme will allow Germany to mitigate the impact of rising input costs on these companies and support the continuation of their activities in this difficult environment”explained Thursday (July 14) Margrethe Vestager, European Commissioner for Competition.

France was granted a similar scheme by the Commission in early July to support large consumer companies from the consequences of the war in Ukraine.

Under the German program, Berlin will pay direct subsidies to offset the additional costs caused by rising electricity and gas prices.

Some have criticized the program for encouraging energy consumption by industry at a time when gas supplies are dwindling.

Especially since they could be further reduced if Russia decides to interrupt deliveries via the Nord Stream 1 gas pipeline.

“The federal government’s strategy can be summed up in a single announcement: green light for gas consumption subsidies for industry”said one of the critics of such a measure.

The German Ministry of Economics and Climate Action immediately stepped in to correct the situation: ” It’s not correct. This is precisely to avoid incentives for greater consumption”the ministry said on Twitter.

One may wonder whether the criteria for awarding subsidies take this into account. Under the scheme, companies that spend at least 3% of their turnover on energy will be able to receive 30% of the price difference compared to 2021 prices. The subsidies will be capped at 2 million euros per company.

Some energy analysts were shocked by this device, considering that it is a clear distortion of competition in favor of German industry.

“This allows German companies to outcompete other Europeans for a limited amount of gas and sends money to Russia with the higher prices! » thus declared on Twitter Georg Zachmann, energy expert at the think tank Bruegel.

Additionally, businesses that experienced a decline in operations in a given month due to increased energy costs can claim 50% of the price difference from the previous year for the following month. The ceiling is set at 25 million euros. The subsidy will be limited to 80% of the losses incurred.

Specific sectors, such as the chemical industry, glassworks, steelworks and ceramics, will receive even greater subsidies. These companies will receive 70% of the price difference, capped at 50 million euros.

In order to avoid an increase in consumption during the subsidy period, the government highlights a provision of the scheme which limits the amount that can be claimed to 80% of the consumption of the previous year.

In this regard, the European Commission will present on July 20 its plan “Saving gas for a safe winter” – to which EURACTIV had access after a leak – whose objective is to reduce the consumption of industrial gas in order to guarantee an adequate supply. for the coming winter.

[Édité par Paul Messad]


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