Electricity tax: associations warn of Germany's deindustrialisation
8/29/2023 Markets & Industries News

Electricity tax: associations warn of Germany's deindustrialisation

The federal government wants to abolish the peak compensation for electricity tax from 2024. For almost 9,000 companies in Germany, this would increase the electricity tax burden tenfold in one fell swoop. Among them are many companies in the energy-intensive SME sector and, of course, also in the casting industry. Associations are therefore urgently warning against this step.

Electric plug and money on a table
The peak compensation was introduced in 1999 at the same time as the electricity tax. It allows companies to receive up to 90 percent of the electricity tax paid back - a total of around 1.5 billion euros per year. In return, the companies must implement measures to improve energy efficiency. Last autumn, the peak compensation was extended by twelve months, but the item is missing from the draft budget for 2024 that has now been passed. 

BDG: "Disastrously wrong measure" 

This is criticised by Max Schumacher, Managing Director of the German Foundry Industry Association (BDG): "The abolition of the peak compensation for electricity tax in the 2024 draft budget leaves me speechless. Because this not only fulfils an ecological purpose, but also has a function for the labour market. I therefore consider a cancellation to be a catastrophically wrong measure that further endangers our prosperity and serves as a catalyst for deindustrialisation in Germany. With this, we are not saving the climate worldwide, but we are moving with great strides towards economic and social consequences in our country."

For the “Bündnis Faire Energiewende” (BfE), this would also be a disaster scenario. "The planned abolition of the peak compensation hits companies at an inopportune time. Energy prices continue to be far too high in international comparison, moreover, the relief provided by the energy price brakes expires at the end of the year, and deindustrialisation in Germany as a business location is in full swing," explained BfE spokesman Christoph René Holler.

The alliance is made up of industrial associations representing more than 10,000 German companies across all sectors, with around one million employees and an annual turnover of around 200 billion euros. Among others, the Federal Association of the German Foundry Industry (BDG) and the General Association of the Plastics Processing Industry (GKV) belong to the BfE. 

Demand for reliable framework conditions

The associations as well as the Federation of German Industries (BDI) appeal to the federal government not to abolish the energy tax peak compensation. According to the BDI, in view of the current tense economic situation, the aim should be to "strengthen the industrial substance and resilience in Germany". Industry expects a sustainable concept for a secure energy supply at internationally competitive costs. The BDI says that many companies are thinking about relocating or only setting up new production abroad.
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