Urgent Funding Demand: Energy Lobby Pushes for Core Budget Allocation to Cut Electricity Costs
Federal interests linked to the energy sector back proposals for cutting electric bills through federal funds allocation
The Association of Energy and Water Industry (BDEW) is strongly urging the federal government to provide funding for the envisioned relief from electricity costs. Addressing the annual industry conference, BDEW CEO Kerstin Andreae called out for budget allocation, arguing that "if we're talking tens of billions in electricity price relief, it should come from the budget, not side pots."
The association pinpoints a reduced electricity tax, support for industry, and fiscal relief as essential moves. Although these steps are crucial, the association stresses that the financial backing should remain stable year over year to ensure long-term investment security. Thus, they've made it explicitly clear to the government to finance the electricity relief from the main budget rather than the Climate and Transformation Fund (KTF).
Federal Minister of Economics, Katherina Reiche, is slated to join the conference later in the day, representing the powerful energy industry lobby. Reiche has announced her intention to lower electricity tax and relieve network charges before the summer recess.
The funding source for these initiatives remains uncertain. While the Finance Ministry has hinted at budget funding for the reduction in electricity tax, the reduction in network charges may find support from a new infrastructure and climate neutrality special budget, financed through debt.
A Closer Look
The government's aim to provide electricity price relief mostly targets relief for both industry and households, with:
- Cost Reduction: The government plans a decrease in electricity prices by at least 5 cents per kilowatt-hour, which could ease annual financial burdens of nearly €10 billion for industry and €6 to €7 billion for private households[1].
- Industrial Aid: Plans for subsidized electricity rates for energy-intensive industries might face challenges due to potential violations of EU state aid rules[3][5]. However, the EU commonly offers flexibility towards major economies such as Germany[3].
- Budget Implications: These subsidies are estimated to cost the government around €10 billion by 2030[3]. This expense is part of broader economic and energy policy reforms that encompass tax relief packages and investment in infrastructure[4].
Although the KTF is not explicitly mentioned in the provided data, the government's energy policy and funding initiatives are intrinsically connected to broader climate and economic transformation efforts. The government is focusing on fostering economic growth by means of tax relief and investment support, such as reducing electricity taxes and grid charges[4]. Simultaneously, its energy policy is aligned with climate objectives, emphasizing the growth of renewables while focusing on system-serving investments[1].
- The Association of Energy and Water Industry (BDEW) emphasizes the importance of budget allocation from the main budget for the proposed relief from electricity costs, stating that it should come from the core budget instead of the Climate and Transformation Fund (KTF), as they believe stable financial backing is necessary for long-term investment security in the industry.
- As part of its funding demands, the government aims to provide electricity price relief primarily for both industry and households, with plans for a cost reduction of at least 5 cents per kilowatt-hour, which could ease annual financial burdens of nearly €10 billion for industry, among other economic and energy policy reforms.
