Germany’s VCI chemical industry lobby calls for electricity subsidy

By Paolo Laudani

(Reuters) – Germany’s chemical sector has called on Berlin to introduce discounted industrial electricity prices, saying companies were losing competitiveness and that the costs threatened a deindustrialisation of Europe’s biggest economy.

The government last year introduced electricity and gas price caps to shield industry and households from rising energy prices, but energy-intensive companies in Germany say electricity prices are still too high.

Wolfgang Grosse Entrup, the head of Germany’s VCI chemicals association, was quoted on Friday as saying the cost of electricity was higher than the U.S. and in France, adding that deindustrialisation has already begun in the country.

The German chemicals sector, the country’s third-largest industry, employing roughly half a million workers, is facing a weak global economy, high inflation and increased interest rates that weigh on demand, Grosse Entrup was quoted as saying by Augsburger Allgemeine newspaper.

A subsidy for industrial electricity prices could cost 25 to 30 billion euros until 2030, according to an economy ministry proposal earlier in the year, but the finance ministry pushed against it, citing budget constraints.

In September, the VCI maintained its gloomy forecast for the rest of the year, seeing a downward trend in Germany’s chemicals and pharmaceuticals industry.

(Reporting by Paolo Laudani; Editing by Riham Alkousaa and Alison Williams)