As we all know, high energy prices make German industrial enterprises difficult, so the German Ministry of Economy proposed by the state to subsidize. German media said, "The state subsidies for industrial electricity prices are not a shot in the head." Robert Habeck, Germany's economy minister, hopes to ease the pressure on energy-intensive industries with such a transition tariff. Obviously, this idea has a lot of political support."
In the professional world, however, economists are unequivocally opposed. In a survey of 205 economists by the Ifo economic Institute, 83 per cent said they opposed plans to use public money to cap electricity prices in energy-intensive industries.
In this regard, economics professors are clearly on the side of Chancellor Olaf Scholz (SPD) and Finance Minister Christian Lindner (FDP), both of whom in the traffic light government have rejected the demands of Green Economy Minister Robert Habeck. Habeck wants to support energy-intensive industries such as steel and chemicals with a "transition tariff" over five years, with the cost of the subsidies estimated at 25-30 billion euros, which the minister wants to finance by raising new debt.
Only 13 percent of professors surveyed by the Ifo Institute believe that subsidizing industrial electricity prices is an effective way to prevent industrial enterprises from moving abroad and to improve the international competitiveness of German industry.
On the contrary, the vast majority of economists warn that such subsidies distort the system of incentives for companies to invest and save energy. Niklas Potrafke, an Ifo researcher, said: "Industrial electricity tariffs will reduce the incentive for companies to produce in an energy-efficient manner."
"It's not fair and it's bad for climate protection." Economists also see the risk of permanent state subsidies for big companies. Not only is it costly, but it also impedes structural change in industry. The Federal Advisory Committee has also previously spoken out against industrial electricity tariff subsidies for energy-intensive industries.
However, Economy Minister Habek made it clear that he does not care about the opinion of economists when it comes to transitional electricity prices. The Greens can count on political support on this issue. The SPD and a majority of state governors also support the plan.
Habeck himself recently told the BDI climate conference that he has a 50% chance of ultimately winning the battle within the coalition, much more than he did a few weeks ago.
Although Federal Chancellor Scholz does not let up on subsidized electricity prices, the pressure within the party is not small. The SPD parliamentary group has called for a decision as soon as this month. Achim Post, deputy chairman of the parliamentary group, told the Rheinische Post newspaper: "We need to quickly establish effective tariff subsidies, especially for energy-intensive companies, in order to maintain industrial value creation and innovation in Germany." Targeted subsidies must be combined with reasonable tax incentives, including industrial electricity prices."
However, most economists in the Ifo survey instead advocated increasing energy supplies. In addition to accelerating the expansion of renewable energy, they advocate continued use of nuclear power. 58% think it was a mistake for Germany to phase out nuclear power. Many researchers believe that abandoning nuclear power is abandoning a climate-friendly and cost-effective energy source.
"High electricity prices undermine Germany's economic competitiveness," while it imports nuclear power from plants in countries with significantly less safe reactors.
In that survey, 38 percent of professors supported the final decision to phase out nuclear power. They argue that the technology has high risks, unresolved storage problems for nuclear waste and a lack of social consensus for sustainable operation, and that continuing to operate nuclear plants will also delay the expansion of renewable energy.
On the one hand, Germany is actively discussing and preparing to subsidize the electricity price of its industrial enterprises on a large scale, and on the other hand, the EU is preparing to launch anti-subsidy investigations on Chinese-made electric vehicles.
The European Union said on Wednesday that there was "sufficient evidence" that China was illegally subsidizing its electric car industry and that it must formally open an "anti-subsidy investigation" into Chinese-made electric cars.
Since European Union President Ursula von der Leyen announced last month to launch an anti-subsidy investigation against China, it has triggered fears among European industrial and economic circles that the move could trigger a trade war between Europe and China.
But an official EU statement on Wednesday still said: "The Commission has sufficient evidence to establish a causal link between the [Chinese] subsidies and the threat of harm to Europe to meet the prerequisites for opening an anti-subsidy investigation."
The statement also listed how the commission had found evidence of Chinese lending to industries at preferential rates, offering tax breaks and buying parts at low prices.
The investigation starts today and must be completed within 13 months. But it does not actually give the Chinese cars enough slack, even during the investigation, allowing the EU to impose temporary anti-subsidy duties for nine months from Wednesday.
If the EU investigation finds unfair competition, it could impose tariffs higher than the EU's standard 10 per cent rate on Chinese carmakers. However, according to German media, "Brussels can also decide not to take any action."
Von der Leyen promised on Wednesday that the investigation would be conducted "fairly." "Where we find evidence that the efforts of EU carmakers are being undermined by market distortions and unfair competition, we will act decisively."
In response, China's Ministry of Commerce said on Wednesday that the move lacked sufficient evidence to support and did not comply with relevant WTO rules.
A spokesman for China's Ministry of Commerce said the European side launched the anti-subsidy investigation only based on "subjective assumptions" about the so-called subsidy projects and the threat of damage, asked China to negotiate in a "very short period of time" and failed to provide effective consultation materials, which seriously damaged China's rights.
When von der Leyen announced the anti-subsidy investigation last month, China criticized the EU's approach as "protectionism in the name of fair trade."
The European Union China Chamber of Commerce also issued a statement on Wednesday, expressing great concern about "this protectionist approach and the increasing politicization of the business environment in the EU." It said it was "disappointed" and "strongly dissatisfied" that the European Commission had "made a unilateral decision without fully considering the damage to the stability of the industrial chain and supply chain and the economic and trade relations between China and the EU".
Automotive manufacturing is one of the EU's pillar industries, employing around 14 million Europeans, or 6.1% of the EU's total employment. Von der Leyen believes that the low price of electric cars in China is due to the "artificially low cost of huge state subsidies".
The word "think" is full of spirituality. In addition, once Germany starts to subsidize industrial electricity prices for industrial enterprises, does it count as "causing market distortions and unfair competition to damage the market"?