The German government had been arguing for months about ways to ease the burden on industry in terms of electricity prices. On November 9, 2023, the dispute over a Industrial electricity price within the traffic light coalition. The compromise now also provides for a Electricity tax reduction for the Manufacturing industry before. What does the entire package of measures look like and who benefits from it?
Electricity tax cut to 0.05 cents/kWh for the manufacturing industry
In order to realize an alternative to the industrial electricity price, the electricity tax for the energy-intensive manufacturing industry is to be reduced to the European minimum. Accordingly, the electricity tax for affected companies will be from 1.537 cents/kWh to 0.05 cents/kWh limited. The statutory regulation is now being implemented and is to apply for at least 2024 and 2025. If it can continue to be financed, it will last for a further three years. What is new is that SMEs, which were previously often unable to claim the peak equalization, will now also benefit from the reduction in electricity tax. However, the basic prerequisite is that the company is assigned to the statistical term "manufacturing and processing industry".
Experts expect approx. 78,000 companieswho now benefit from the low rate. This now includes, for example, bakeries, butchers, woodworking businesses and metal construction. The latest decision does not change anything for all other tradespeople. The tax rate of 2.05 cents/kWh will continue to apply to them. This also applies, for example, to energy-intensive dry cleaners or businesses in the automotive trade, as they do not count as "manufacturing industry". It remains to be seen whether further changes or extensions can be implemented when the compromise is implemented.
Peak equalization to be abolished
To date, many larger companies have already received a reduced tax rate of 1.537 cents/kWh as part of the so-called peak equalization scheme in accordance with Section 10 StromStG. Companies were previously able to apply for this if they were part of the manufacturing industry, paid more than €1,000 in electricity tax per year, the amount was higher than the reduction in the employer's pension insurance contribution for all employees and they had introduced an energy management system or a peak equalization efficiency system (in accordance with SpaEfV). This Peak equalization is as part of the new electricity price package abolished from 2024.
Extension of electricity price compensation by five years
In addition to the electricity tax reduction, the electricity price compensation, which was actually to be reduced by 10 % annually, will be extended by a further five years. The following will benefit from this 350 groupsthat suffer particularly from high electricity prices. A further 90 companies will be added through the so-called "super cap". This financial support for indirect CO₂ costs can be applied for from the DEHSt and is based on emissions trading. It aims to offset some of these costs for companies in specific sectors.
The overarching goal is to ensure the international competitiveness of these companies. This measure is intended to help prevent the relocation of production to countries outside the EU Emissions Trading Scheme and thus minimize the relocation of CO₂ emissions. Beneficiaries are companies from the paper & pulp, iron & steel, chemical industry, non-ferrous metals, mineral oil processing and mineral processing industries. In 2021, 828 million euros in subsidies were awarded in this context to companies that have implemented an environmental management system in accordance with ISO 50001 or EMAS introduced and after DIN EN 17463 (VALERI) have invested. Depending on the size of the company and consumption, aid can also be applied for after the introduction of ISO 50005, energy audits in accordance with EN 16247-1 and membership of the energy efficiency and climate protection network.
Industrial electricity price off the table for now, electricity tax cut relieves more companies
The resolutions of the Federal Government, which are now to be implemented, will result in the following for 2024 alone Relief of up to twelve billion euros for companies, says Olaf Scholz on the Electricity price package. Compared to a capped industrial electricity price of 6 cents/kWh, however, the new regulation has the advantage that the number of companies benefiting from it will be much larger. The forecast total relief for 2024 is made up of the following:
- 5.5 billion subsidy for the transmission system operators, who together with the distribution system operators already have a Increase in network charges of over 10 % are planned for 2024.
- Estimated revenue shortfall due to the reduced electricity tax for the manufacturing industry
- Estimated expenditure for the extension of electricity price compensation, as certificate prices rise and make electricity from fossil fuels more expensive.
In fact, according to BMWK, only around 2,000 companies with a total consumption of 216 TWh from the Steel sectors, Aluminum, Chemistry, Copper, Glass, Paper and Cement receive a favorable industrial electricity price. The electricity tax reduction as a compromise now affects far more companies, even if it cannot significantly reduce the price of electricity: The abolition of the EEG levy in 2022 alone reduced the price of electricity by over 6 cents/kWh.
Without an industrial electricity price and with an electricity tax cut, Germany remains in the European midfield
From the start of the war in Ukraine until the end of 2022, the gross electricity price for industry in Germany rose only slightly from 21.81 to 25.24 cents/kWh. In the EU as a whole, it rose on average from 15.23 to 24.95 cents/kWh in the same period. This means that even after an electricity tax reduction of around 1.5 cents/kWh, Germany remains in the middle of the field. The strongest increases were recorded in Denmark, Italy, Hungary, Belgium, Sweden and Croatia. Here, industrial electricity prices have virtually doubled since February 2022.
In Norway, prices exploded from 6.03 to 26.63 cents/kWh and the USA recorded an increase from 5.36 to 7.36 cents/kWh. At the latest with the entry into force of the European CO2-border adjustment system (CBAM)which is due to take effect from January 1, 2026, the shift of a CO2intensive production to non-European countries will also no longer be attractive for re-imports. This is because importers will then have to pay the difference in CO2-pricing between the production region and the EU.