New EU state aid rules threaten renewables levy rebates for German industry – legal expert

Proposed changes to EU state aid regulations are causing concern among Germany's most energy-intensive companies that are currently benefiting from rebates that shield them from paying the country's notoriously high power prices in full, Klaus Stratmann reports in business newspaper Handelsblatt. The industry rebates allow energy-intensive businesses, for example in steel production, to be (partially) excluded from paying the renewables surcharge levied on most other consumers that has been used to finance the expansion of wind, solar and other renewable power installations. The surcharge in 2021 amounts to 6.5 cents per kilowatt hour of power used, resulting in payments of nearly 30 billion euros per year. But the European Commission now is targeting these rebates in a way that will "leave not one stone standing" of the existing power pricing scheme, energy lawyer Gernot Engel told Handelsblatt. Engel argued the rebate mechanism would be "crucial for the survival of Germany's industry." A draft of the new state aid directive is currently being discussed between the European Commission and stakeholders. The new rules would oblige energy intensive companies to make provisions for a transition to clean energy sources and emissions reduction in production procedures and could drastically reduce the number of companies eligible for rebates, Stratmann writes.

A reform of the entire system of surcharges and levies in the German energy sector has been called for both by the opposition and members of the governing parties for several years but the complex endeavour has not yet made it to the top of the government's list of priorities. The government instead has mulled doing away with the renewables surcharge altogether and tilted the funding mechanism towards direct funding from the public budget, which the proceeds from Germany's newly introduced carbon pricing scheme for the transport and heating sector could partly cover.