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Energy

EU, Germany forge deal on energy price breaks for business

Germany’s multi-billion-euro exemption of heavy industry from green energy charges does not violate EU rules on industry rebates. Berlin and Brussels have agreed to keep the energy price breaks, but on a smaller scale.

After months of wrangling, the German government and the European Commission had reached an agreement on the country's industry exemptions to renewable energy surcharges, German media reported Tuesday, quoting sources close to the talks.

Final details of the agreement would be presented by the Commission on Wednesday, the sources said, when the EU's executive branch would unveil its new guidelines on industrial rebates. But Germany had apparently allayed EU concerns that its energy price breaks for some industries violated EU rules, they added.

Germany’s energy transition in an international context

Germany's renewable energies law (EEG) guarantees fixed, above-market prices for green energy producers in an effort to boost the build-up of renewable forms of energy. Energy-intensive industries and those competing internationally, however, are exempt from paying a surcharge on electricity bills, which has been introduced to finance the endeavor. Last year, more than 2,100 companies were granted discounts worth a total of 5.1 billion euros ($7 billion).

Under the agreement reached between Brussels and Berlin, some 65 industrial sectors have been singled out, which, in future, will have to pay 20 percent of the green energy surcharge. This, however, only to a maximum amount of 4 percent of a company's gross value added (GVA). GVA denotes the difference between a company's output and its intermediate consumption. Originally, the EU Commission had wanted the figure to be 5 percent, the sources said.

Moreover, the cap for energy-intensive industries such as aluminum smelters and steelmakers would be 2.5 percent, with Berlin having been granted leeway to reduce the cap to 1 percent under specific circumstances.

The dispute has caused the ire of German industry, which has warned that they may have to halt investment or even re-locate production abroad if the costs of power renders them uncompetitive.

Ordinary Germans have to pay the surcharge in full, adding about 220 euros to the electricity bill of a household consuming roughly 3,500 kilowatt hours a year. As a result of the boom in solar and wind energy, consumers saw their bills go up by 60 percent in the past decade. The deal on industrial rebates, however, is unlikely to drive down German electricity retail prices. Experts have calculated that fewer companies will be granted rebates, but they are set to rise on an overall scale.

uhe/msh (Reuters, dpa)

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