Power subsidies key to Germany’s green transition – Habeck

(Montel) Germany’s green transition will require energy price subsidies to be realised, said economy minister Robert Habeck on Wednesday.

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“The arguments about subsidies and whether to keep industries here… you can fight about that, but if you do not have it, then you are completely dependent on the global market and the turbulence in which it finds itself,” he said.

He was presenting the ministry’s annual report, which confirmed government plans to sink energy taxes for key industries to EUR 0.50/MWh, from EUR 15.37/MWh, until the end of 2025.

This is part of a plan to support businesses that have suffered higher energy costs amid the transition away from cheaper Russian fuels in the wake of the Ukraine war.

“Security has a price”
Habeck pointed to power prices coming down from their peaks seen during the continent’s energy price crisis. The benchmark front-year contract was last seen at EUR 70/MWh, compared with EUR 154/MWh one year ago and about EUR 1,000/MWh in August 2022.

“But the energy prices are still not where we want them,” he said, adding that economic “security has a price”.

Germany’s energy economy was still in the process of transitioning from Russian fuels, said the report, and it could take about three years to construct the necessary LNG infrastructure.

Construction work to orient the country from eastern pipelines to northern LNG terminals would continue through the winter of 2026/27, it added.

Habeck said it was important to focus on the fact that such infrastructure projects were moving quickly as the government had lessened bureaucracy.

Green transition plans
The report also touched on green transition plans that faced uncertainty from recent budget turbulence. For instance, it said tens of billions were planned for decarbonisation efforts.

The government already announced EUR 4bn from EU funds for its carbon contracts for difference programme.

The future of the programme has been in doubt since Germany’s constitutional court ruled the government’s plans were not in line with budget rules.

The ministry also confirmed its goal of shutting down the coal industry by 2030. It said doing so was critical to the green transition, although many in the coal industry have warned Germany may not have the power generation capacity it needs without coal by that point.

The government also said it was investigating setting up guidelines for carbon capture and storage (CCS), a policy that has long been opposed in Germany.

It said that any CCS project would be limited to industrial emissions impossible to sideline in the policy being considered, an approach suggested last year by industrial and environmental groups.