“We can learn a lot from the IRA”

Hanover From the point of view of Lower Saxony’s Prime Minister Stephan Weil (SPD), Europe must improve its funding programs for green technologies. “We have to be guided by reality, whether it’s about China or the USA,” the politician told the Handelsblatt. It is now necessary for Europe to take action in order to be able to compete with these two countries. German politicians must also consider how they can create a good environment, especially for companies that are necessary for the transformation. Weil was referring to the family company Viessmann, which has sold its heat pump business to the USA.

One possibility for politicians is to streamline bureaucracy and support companies in switching to renewable energies. Last week, Lower Saxony proposed a capped electricity price of seven cents per kilowatt hour for energy-intensive companies.

Weil sees the US Inflation Reduction Act (IRA), a support program for green technologies, as an example of successful economic policy. The Americans lured with great economic advantages, he said. “No less importantly, the IRA makes investing quick and easy, without the bureaucracy.”

Read the full interview here:

Mr. Weil, the Viessmann family company is selling its heat pump business to the US competitor Carrier Global. Do you think that this step is a mistake from a German point of view?
It’s always a shame when German companies get foreign owners. But we live in a free world and the owners of Viessmann will have their reasons for taking this step. Maybe it’s a timely warning shot. German politicians must now ask themselves how we can create a good environment, especially for companies that we urgently need in the transformation.

While the USA is attracting green investments through its IRA subsidy program, entrepreneurs in Europe and Germany are confronted with what they see as a bureaucracy that is getting out of hand.
We can learn a lot from the IRA, including procedure. The Americans are decidedly less bureaucratic than we are in Europe, and that has had an impact. We must have answers early in 2024, preferably even earlier. Companies are now in the process of transformation, decisions must be made now.

>> Read here: EU warns of factory closures over IRA

Europe has the “Green Deal” which could be a counterpart to the IRA. Why doesn’t the EU concept work?
There is a world of difference between these two programs. The Americans entice with great economic advantages. And no less importantly, the IRA makes investing quick and easy, without the bureaucracy. The EU and Germany can learn a lot from that.

If the bureaucracy cannot be reduced so quickly, how can politicians intervene to help?
We must support the energy-intensive companies in the transition. We propose a price cap of a maximum of seven cents per kilowatt hour…

…so more than a halving of the current electricity costs.
This transformation electricity price, which is limited to a maximum of ten years, is intended to help bridge the time until cheap renewable energy is sufficiently available.

Steelworks in Salzgitter

The Lower Saxony government has proposed a state-subsidized electricity price for energy-intensive companies of no more than seven cents per kilowatt hour.

(Photo: dpa)

What is the response from the coalition in Berlin to this proposal?
First of all, I am very happy that there is finally some movement in the discussion, and I hope that our concept will contribute to this. We have received positive feedback from business and trade unions in Lower Saxony. We have to take action! If nothing happens, that will ultimately be the most expensive thing for us in Germany and Europe, because in the end factories and jobs will be gone. We can see that plans for further battery production projects are currently up for grabs due to the high energy prices.

>> Read here: Habeck wants additional money for the price of industrial electricity – but Lindner refuses

However, because of the high costs, we cannot support everything. What do we need here in Europe?
Of course there have to be limits – it’s about energy-intensive companies that are in the process of transformation. One thing is important to me: we have to keep the value chains in the country, from which we have always benefited greatly in the past. Let’s take the automotive industry for example. It just needs metal production and chemical precursors. The energy industry with all its activities is also very important – we have to be at the forefront right from the start when it comes to hydrogen. This will be the energy of the future for industry, but we mustn’t get out of it. If nothing happens at all, we will see creeping deindustrialization in Europe.

This complaint has been heard in the industry for decades. Why should it be different now?
Current electricity prices are not phantom pains. And there are already the first reductions in production or even relocations. I take this very seriously.

When it comes to the energy transition, Germany is dependent on other countries. Especially in the case of solar energy, China has destroyed an existing structure with unfair subsidies…
I really don’t want a subsidy race, but we can’t afford to die in beauty either.

So far, Europe has avoided such a race. Shouldn’t we hold this line?
We have to look to reality, whether it’s China or the US. If we want to hold our own against these two countries in global competition, then Europe must take action. If one side starts and the other stops, then the race is already lost. We Europeans are not the only region in the world who can uphold the idea of ​​a free economy without subsidies if the players on the left and right behave differently. It’s about our future.

In this scenario, shouldn’t the federal government block the sale of Viessmann?
I do not think so. Companies will continue to be sold here in the future, just as our companies buy abroad. The task of politics must be that no entrepreneur feels compelled to take such a step. It is therefore important that we improve the framework conditions for the domestic economy.

Mr. Weil, thank you very much for the interview.

More: “There would have been financially more attractive alternatives”

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