German government fails to reach decision on electricity subsidies

BERLIN

Germany’s liberal-left coalition government failed to reach a decision on electricity subsidies during two days of meetings in Meseberg.

A proposal by the Greens-led Economy and Climate Ministry to limit prices to 6 cents per kilowatt-hour for certain industries could not win the support of Chancellor Olaf Scholz.

Speaking to reporters on Wednesday at the end of the two-day government retreat in Meseberg Castle, Scholz said the government has already undertaken serious efforts to ensure a steady and affordable supply of energy.

“The fact that we acted so early helped us get through the winter, and it didn’t get cold in our homes and factories, and the economy was able to continue to operate,” he said, referring to the government’s measures to replace Russian energy imports and boost renewable alternatives.

“And we spent a lot of money to subsidize this, many billions, as the price increase was noticeable everywhere during that time. Now we are seeing that the prices are falling again,” he added.

Social Democrat Scholz underlined that Germany’s import prices saw a significant decline in July, showing that falling energy prices have a positive impact on companies.

“The overall import costs for Germany are falling, and this is the result of the strategy we have developed. And our strategy aims at ensuring low electricity costs in Germany by expanding renewable energies at an even faster pace,” he said.

Earlier, Finance Minister Christian Lindner from the liberal Free Democratic Party (FDP) rejected plans by the Greens to subsidize the electricity used by industrial companies. He argued that such a measure would contradict the principles of social market economy and would be “economically unwise.”

Chancellor Olaf Scholz’s coalition partners, the liberal FDP and environmentalist Greens repeatedly clashed over divisive issues, such as exiting nuclear energy, tax relief for businesses, and funding for social services.

Despite differences, the ministers managed to reach agreement Wednesday on a number of other issues, including a draft bill to support climate-friendly investments, a plan to reduce bureaucracy, and a blueprint for improving digitalization.

• Electricity subsidies
• Germany