Germany Plans Industrial Electricity Subsidies to Boost Energy-Intensive Sectors in 2026

Germany plans to introduce a subsidized industrial electricity price starting January 2026 to reduce energy costs for power-intensive sectors like steel, chemicals, and glass, aiming to enhance the competitiveness of its industry amid high electricity prices. Economy Minister Katherina Reiche stated that negotiations with the European Commission are in the final stages, with the scheme potentially costing the government up to 5 billion euros over three years and benefiting around 2,000 companies. This measure is part of Chancellor Friedrich Merz's broader plan to revive Germany's industrial sector and economic growth, which has been challenged by high energy prices driven largely by the ongoing war in Ukraine. The subsidy plan requires an exemption from EU state aid regulations, which the Commission has indicated support for, provided certain conditions are met, including obligations for supported firms to invest in reducing greenhouse gas emissions. While the scheme has faced criticism for potentially discouraging energy efficiency and focusing only on firms rather than households, it is viewed as crucial for the steel sector's competitiveness and the overall industrial landscape. The government also sees extending electricity price compensation beyond 2030 as vital for ongoing industrial support.