The rise in gas and electricity prices in Germany is hitting the energy-intensive industry hard.
(Photo: IMAGO/Panama Pictures)
The rise in gas and electricity prices is particularly drastic in Germany. This hits the heart of the energy-intensive industry. It is the state, of all people, that is boosting development. And this is by no means a new development. On the contrary.
Energy costs are traditionally high in Germany. The state plays a significant part in this. State-induced burdens have pushed prices to record highs relative to countries inside and outside Europe.
The gap between Germany and other industrialized countries is widening, the differences can no longer be explained away.
This creates a heavy burden for energy-intensive companies that face international competition. The fact that for a long time they have been investing less than they are depreciating, i.e. consuming their substance, comes as no surprise. Unfortunately, there is much to suggest that this trend will continue to intensify in view of the new burdens caused by the increase in gas and electricity prices.
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With the gas procurement levy, the federal government is making everything even worse. It offers companies no reasonable compensation. The reduction in the VAT rate for gas may be a welcome help for private households, but it does nothing for companies.
Transparent and permanent investment conditions are important
The compensation offered by the federal government to companies is called the Energy Cost Relief Program. But this repair tool has a number of weaknesses, which is also a tradition.
Driven by concerns that the EU Commission could brand the program as illegal state aid, the Federal Ministry of Economics has developed criteria that are unfulfillable for a large part of the industry – both in terms of content and form. It will be interesting to see whether the five billion euros that have been made available can actually be used in the end.
It’s not about handing out alms, but about improving investment conditions transparently and permanently. That costs a lot of money. But the energy-intensive industry will not be able to survive otherwise.
In view of the turmoil on the energy markets, it is perhaps not entirely fair to remind Chancellor Olaf Scholz of the promise he made to industry a good year ago: “My goal is an industrial electricity price of four cents,” said Scholz, who was still an SPD at the time – Chancellor candidate, said.
At the moment the price on the spot market is 60 cents. In between there is a factor of 15. The federal government still has a lot to do if it wants to at least come close to Scholz’s goal.
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