The German government wants to cut subsidies for industrial firms by €1 billion a year for three years

Cuts to state subsidies and the reallocation of funds from environmental funds in Germany could result in additional costs for the domestic steel sector amounting to €50 million ($58 million) each year. This was stated by Gunnar Grebler, CEO of Salzgitter and current chairman of the Wirtschaftsvereinigung Stahl association.

This year, the German government has allocated €6.5 billion in subsidies to industrial firms to offset the sharp rise in electricity transmission charges. However, during budget discussions, it emerged that there are plans to cut these payments by approximately €1 billion a year over the next three years.

According to Grebler, this will place a significant additional financial burden on German steel producers.

In addition to the cuts to subsidies, the head of Salzgitter expressed concern about the proposal to withdraw €2.7 billion from the Climate and Transformation Fund (KTS). This fund is financed through the sale of carbon emission allowances, and its resources are intended to be channelled towards decarbonisation and reducing energy prices for industry. The government, however, plans to use these resources to cover the general government budget deficit.

An alliance comprising 15 industry associations and environmental organisations, which the Wirtschaftsvereinigung Stahl has also joined, has spoken out against such measures.

“Revenue from emissions trading should be used to further decarbonisation and reduce energy prices, rather than to plug holes in the national budget,” emphasised Gunnar Grebler.

The German government has planned  to reduce the annual federal subsidy for lowering electricity grid charges to €5.52 billion from 2027 to 2029. Funding will be provided through the KTS. Under the proposal, the subsidy will be granted to transmission system operators and taken into account when calculating network tariffs.