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German Industry Calls for Power-Subsidy Waivers Amid Planned Cut

Nov. 12 (Bloomberg) -- Germany risks losing jobs and investment if Chancellor Angela Merkel’s third-term government scraps exemptions for companies from the rising cost of clean-energy subsidies, industry groups said.

Merkel’s Christian Democrat bloc and the Social Democrats over the weekend agreed to “review” some exemptions for large energy users from a renewable subsidy fee that has quintupled since 2009. The aid is valued at about 4 billion euros ($5.3 billion) this year, according to Environment Ministry data.

“The exemptions are essential as energy costs are already very high in Germany,” Roland Schmied, a spokesman for VIK, a group of industrial energy users, said today by telephone from Essen. “If Germany wants to keep its industry with the current value chain, then there has to be a regulation also in the future that secures competitive energy prices.”

Germany is granting aid to its companies as the U.S. shale-gas revolution widens the European Union’s energy cost gap with its largest trading partner. While Merkel has said the waivers to companies ranging from Bayer AG to HeidelbergCement AG are vital for the German economy’s competitiveness, she’s under pressure to cut power costs for household consumers and answer EU concerns that the support may be illegal.

Germany has granted power-fee waivers to 1,716 companies or units at 2,295 locations, according to data from the federal export agency. The number of exemptions may have to be “more than halved” to ensure the aid doesn’t violate EU competition rules, Heiko Maas, a lawmaker with the Social Democrats who took part in the coalition talks on energy, said yesterday.

Dow, BASF

Germany’s chemical industry is “existentially dependent” on the aid, Manfred Ritz, a spokesman for the VCI chemical lobby, said today by phone. Large plants run by companies including Dow Chemical Co. in northern Germany, BASF SE in Ludwighshafen and Wacker Chemie AG in Munich “sustain a large number of jobs and are dependent on the exemptions,” he said.

Merkel said in July that Germany would “fight resolutely” in Brussels for the waivers, which free companies from paying the full fee to support the country’s clean-energy expansion. Negotiators from the parties over the weekend agreed they want to “further develop the aid to make it fit for the future,” according to a document from the coalition talks. They haven’t yet said how many exemptions they want to cut.

Both Schmied and Ritz said they’re “optimistic” that a new government will keep protecting companies to safeguard Europe’s biggest economy.

“The German energy switch is to strengthen industry and that’s not possible without the exemptions,” Ritz said.

To contact the reporter on this story: Stefan Nicola in Berlin at snicola2@bloomberg.net

To contact the editor responsible for this story: Reed Landberg at landberg@bloomberg.net

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