Economists reject proposal for industry power price subsidies – survey

The majority of over 200 economists surveyed by the Institute for Economic Research (ifo) reject German economy minister Robert Habeck’s proposal to subsidise electricity for certain energy-intensive industries. Eighty-three percent of respondents said they do not support the idea, while 13 percent said they do. Economists also describe a possible industrial electricity price as unfair and harmful for climate protection, writes ifo. “There is a fear that a temporary subsidy could easily become a permanent subsidy for large companies, which would be expensive and hinder structural change,” said ifo. Almost 60 percent of respondents said they do not support the decision to finalise the country’s nuclear exit. Another 60 percent said they rejected the reform of the heating law, which had caused a fierce public debate and a dispute within the government coalition. The economists argue that the law regulates in too much detail, said ifo. Moreover, in their opinion, the law leads to unnecessarily high costs for private households and creates confusion among the population, said the institute.

Germany is considering a plan to boost the international competitiveness of its prized heavy industry by subsidising electricity. Energy-intensive firms are to receive billions of euros in state help if they promise to decarbonise and to stay within the country, according to a proposal by the economy and climate ministry. Companies which qualify for the subsidies would be guaranteed electricity for 6 cents per kilowatt hour, for 80 percent of their consumption until 2030. This would require 25-30 billion euros in state funds. The proposal was welcomed by industry as “a clear game changer”, but remains controversial among policymakers like chancellor Olaf Scholz, and economists. There are also EU concerns about unfair competition.