Questions & Answers

How are energy-intensive firms exempted from the surcharge for renewable power?

In 2003, three years after the 2000 EEG was adopted, the German government agreed that energy-intensive industry that faces international competition should be exempted from the surcharge to cover the cost of renewable power. The goal was to ensure that such firms do not “go offshore.” But over the past years, the German government has unnecessarily expanded those exemptions to cover firms that do not face international competition, thereby increasing the cost burden on consumers and small and medium sized companies.

Energy-intensive industry is widely exempt from the surcharge to promote renewables. While almost everyone basically paid 6.4 extra cents per kilowatt-hour in 2015, energy-intensive firms only paid the full surcharge on the first gigawatt-hour of what they consume if their power costs make up more than 14 percent of their total production costs. Above that, energy-intensive industry pays a fraction of the surcharge of 0.05 cents for all electricity consumed above 100 gigawatt-hours per year.

In 2015, the exempt industrial firms consumed 18 percent of German power supply but only covered 0.3 percent of the total surcharge for renewable electricity. The government has increased the number of industrial firms exempted from the surcharge from less than 600 to more than 2,300. Critics point out that many of these firms do not face international competition (such as municipal public transportation providers) and therefore should not be exempt.

Overall, energy makes up a relatively small part of production costs in Germany's processing industry.