2023-10-22 16:43:00
Electricity pylons in front of a cement plant – this industry uses a particularly large amount of energy.
Photo: dpa/Silas Stein
In part, you can distinguish between critics and supporters of a controversial wish from local companies based on the terminology: while the former reject an “industrial electricity price” as further long-term subsidization of large parts of the manufacturing industry, the latter prefer to speak of a “bridge electricity price”. This means that it is a temporary aid until there is enough cheap green electricity available at some point. The year 2030 is mentioned.
On Friday, an “alliance for bridge electricity prices” called for a bridge electricity price to be decided on by the latest coalition committee in a letter to Chancellor Olaf Scholz and the entire government as well as the parliamentary group leaders of the traffic light parties. The reason is the “increasingly dramatic economic situation of the energy-intensive industries in Germany.” The massive reduction in local production that has already been observed is “acutely endangering jobs and locations.”
The alliance is an illustrious group: The loud lobby group includes the heads of numerous industry associations, for example in the chemical, steel and building materials sectors, but also DGB boss Yasmin Fahimi and the chairmen of the metal and mining, chemical and energy industrial unions. Outgoing IG Metall boss Jörg Hofmann, for example, speaks of an “overdue decision”. The investments necessary for the upcoming transformation would be “prevented by electricity prices that are currently uncompetitive and unpredictable in the medium term.” The IG BCE, in turn, announced “dozens of company actions.”
As is well known, electricity prices skyrocketed in the wake of the Ukraine war. Especially in Germany, as there was a threat of a gas shortage before the winter of 2022. Politicians tried to mitigate the worst consequences by capping electricity prices, and prices on the electricity exchanges have now fallen sharply again, even if they are still above pre-war levels. In addition, in industry, many energy-intensive processes are being electrified as a result of decarbonization, which means the demand for electricity is increasing significantly.
There was also no agreement in the most recent coalition committee, because the supporters of a bridge electricity price cross political camps: conservative SPD politicians, especially prime ministers from industrially strong countries, have brought it into play, while party colleague and Chancellor Olaf Scholz rejects it. As does the FDP, which is actually close to companies. In the Greens, the business-oriented wing around Robert Habeck is in favor, while there are isolated voices against it – Jürgen Trittin warns against “investments with a shotgun.” The CDU/CSU are just as in favor of it as some left-wing politicians: According to Bundestag member Alexander Ulrich, IG Metaller from Kaiserslautern, companies need affordable industrial electricity – “and quickly”. In the Bundestag, the parliamentary group called on the government to draw up a draft law. Economists are also divided: While the left-wing economist Rudolf Hickel is in favor of such “bridging aid” in view of the current economic downturn, Ifo President Clemens Fuest considers the idea to be “unsustainable” because electricity costs in Germany are permanently higher than in many others countries.
The demand is controversial even in the highest trade union circles: “I can only advise political actors against a purely industrial electricity price,” said Verdi chairman Frank Werneke to the Germany editorial network. Many private households and social institutions would also have to be included in a state-controlled electricity price. Werneke therefore even sees “enormous explosive power” in the initiative.
What he is referring to: While private households currently pay an average of 29 cents per kilowatt hour, a paper from the Ministry of Economic Affairs suggested an electricity price of six cents for energy-intensive industries. There was also talk of five cents. In addition, a maximum of 1,000 to 2,000 large companies were originally supposed to be happy. Then industries always came out as energy-intensive, including medium-sized businesses.
The fact that the inflationary expansion to more and more companies is avoiding the problem is shown by a current simulation calculation by the German Institute for Economic Research: “Even extreme cost increases would only put a significant burden on a few companies in a few narrowly defined industrial sectors,” it says. This included parts of industrial gas production and the production of aluminum, cement and inorganic chemicals. Although these sectors consume up to a quarter of industrial electricity, they only account for a small share of the local industrial value creation. “A major wave of companies migrating due to current electricity prices therefore seems unlikely,” concludes co-author Robin Sogalla. The bridging nature of the subsidy is also not credible, according to the researchers. Some energy-intensive industries would continue to be faced with competitive disadvantages compared to non-European countries.
Energy economists largely agree on their critical assessment. From an economic point of view, even the environmental association BUND argues that it is not the price of electricity that is decisive for competitiveness, but rather the energy and unit costs of electricity, “and here German industry has been in line with the European average in the past, despite higher electricity and energy prices,” says managing director Antje von Brock. She recommends carefully examining which sectors of industry could really be at risk of migration and advises targeted funding for investments in the conversion towards climate neutrality.
In any case, the energy-intensive industry is already heavily subsidized, for example in electricity taxes and levies such as network fees. In addition, large buyers have negotiated low tariffs with their suppliers. The previously low costs and the lack of political regulation make investments in energy-efficient technologies unprofitable. This would be further reinforced by an industrial electricity price.
Since there is little technical evidence to support such subsidies for large parts of the industry, the “Alliance for Bridge Electricity Prices” resorts to barely concealed threats. Markus Steilemann, President of the Association of the Chemical Industry, says: “Our energy-intensive companies will no longer be able to continue to operate in Germany with high energy costs that threaten their existence.”
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