The European Commission has approved state aid for energy-intensive industries in Germany, Bulgaria and Slovenia, paving the way for subsidized industrial electricity prices. The aim is to ease pressure on companies in the short term amid high energy costs and to prevent relocation to countries with lower environmental standards.
Specifically, Germany will provide 3.8 billion euro, Bulgaria 334 million and Slovenia 90 million. The electricity price for eligible companies may be reduced to as low as 50 euro per megawatt hour. The schemes will apply for a maximum of three years. A further condition is that at least 50% of the aid must be invested in decarbonization measures.
The Commission justified the approvals on both industrial and climate policy grounds. The programs are “necessary, appropriate and proportionate” to safeguard the economic viability of energy-intensive companies while accelerating the transition to a climate-neutral economy. The legal basis is the state aid framework for the Clean Industrial Deal, which explicitly allows state intervention to stabilize industry.
Competitive Pressure Puts Austria on the Spot
While Germany, Bulgaria and Slovenia are providing targeted relief to industry, pressure is mounting in other European Union states to follow suit. In Austria, the Federation of Austrian Industries is already calling for the rapid introduction of a comparable model. Its secretary general, Christoph Neumayer, warned of competitive disadvantages: “Our companies compete directly with German firms. If energy prices are cushioned there, we must also create comparable conditions.”
This raises the prospect of a dynamic that goes beyond individual national programs. If several states shield their industries with subsidized electricity prices, a subsidy race could emerge within the single market. A measure originally conceived as an exception risks becoming the new standard.
Particularly notable is the role of Bulgaria, which is launching a comparatively large program worth 334 million. It underlines how high energy prices are no longer confined to major industrial economies but affect the entire European economy.
A Costly Stopgap Without Structural Impact
For all their scale, the programs are clearly time-limited. The aid will expire after three years at the latest. That is precisely the central weakness of the measure: it does not change Europe’s structurally high electricity prices but merely masks them temporarily.
The market price of electricity remains high, shaped by CO2 costs, grid charges and the structure of the European energy market. The state relief functions as a subsidy rather than a reform. In three years, the companies concerned will face the same starting conditions as today.
At the same time, no fundamental measures have been adopted that could ensure permanently lower energy prices. Neither a far-reaching market adjustment nor relief for consumers forms part of the scheme. Households and smaller businesses do not benefit from the subsidized prices.
The industrial electricity price thus remains a classic crisis-policy instrument: effective in the short term and politically necessary, but without a sustainable solution. The underlying question of why energy remains structurally expensive in Europe is once again deferred.