Energy Lobby's Demand: Federal Budget for Lowering Electricity Prices
Federal budget should include funding for lowering electricity prices as per requests from influential energy industry lobbyists.
The Federal Association of Energy and Water Industry (BDEW) is urging the federal government to securely fund the electricity price reduction plan they've been discussing. "If we're talking about billions in electricity price relief, it should come from the budget," BDEW CEO Kerstin Andreae emphasized at the annual industry congress.
The association emphasizes the importance of reducing electricity tax, supporting industries, and offering price reliefs. However, financial security necessitates that the resources for this initiative should not be diminished year after year. Thus, BDEW is adamant that the German government should fund the electricity price reduction from the core budget and not from the Climate and Transformation Fund (KTF).
Federal Minister of Economics, Katherina Reiche, is scheduled to address the congress of one of the most prominent lobby associations in the energy sector later in the afternoon. The CDU politician has previously announced her intention to press for reduced electricity tax and relief from network charges before the summer break.
At this point, the source of funding remains uncertain. In the Finance Ministry, it was suggested that the reduction of electricity tax might be funded through the budget, while the cut in network charges could potentially be covered by a new special budget for infrastructure and climate neutrality, financed by debt.
Germany's plans to fund electricity price relief involve subsidized electricity prices for industries, particularly energy-intensive sectors such as steel, chemicals, and glass. This policy is a key component of Chancellor Friedrich Merz's industrial revitalization strategy, aimed at lowering high electricity costs, currently at about 16.1 cents per kilowatt-hour for industry. The proposed subsidy seeks to bring this down to around five cents per kilowatt-hour, offering substantial financial relief [1][4].
However, these plans face challenges due to EU state aid laws. The scheme requires EU approval and raises concerns about its legality under current regulations. Despite these obstacles, Germany is exploring various strategies to implement the plan, possibly borrowing from successful frameworks or models in other European countries [1][2][3].
Given the potential legal challenges, the exact funding sources and allocation mechanisms are still unclear. However, the initiative aims to benefit both industries and private households, with the latter potentially saving €6 to €7 billion annually if the electricity price drops by at least five cents per kilowatt-hour [4].
[1] ntv.de[2] RTS[3] Citing regulations from other European countries[4] Based on calculations assuming a five-cent reduction in electricity price per kilowatt-hour for private households.
- The Energy Lobby, including the BDEW, is advocating for the German government to fund the electricity price reduction plan from the core budget, rather than the Climate and Transformation Fund (KTF), to maintain financial stability in the employment policy of the Federal budget.
- In order to implement the proposed subsidized electricity prices for industries and offer financial relief, the German government is considering various strategies, inclusive of employing successful frameworks from other European countries, thereby influencing the employment policy and industry within the energy sector.
