Climate subsidies for companies: funding with a catch

Habeck’s billions in subsidies for green production make sense. But there is no record of how much green electricity Germany can produce.

With billions in subsidies, Robert Habeck wants to promote climate-friendly production in companies Photo: Michael Kappeler/dpa

Basically, Federal Minister of Economics Robert Habeck does everything right with his billion-dollar program: The German industry can only switch to green raw materials if the state reimburses the extra costs. Otherwise the companies would lose their international competitiveness. It is also right to only support companies that produce with green electricity. It would make little sense for climate protection to replace fossil gas or oil with fossil electricity, which comes from coal-fired power plants, for example.

Nevertheless, Habeck’s plan has a big catch: So far, there has been no balance sheet on how much green electricity can be produced in Germany at what cost. It would also have to be taken into account what it costs to temporarily store green electricity in the long term in order to be prepared for lulls and darkness. Such a balance would be important in order to avoid a kind of tree change game if green electricity is not enough for all interested parties and remains scarce. In such a case, the subsidized industry would produce with green electricity, but many e-cars and heat pumps would run on fossil-based electricity. This variant would be very expensive – and would do nothing for the climate.

This ugly scenario is not improbable, because the areas in Germany should not be enough to enough green electricity for industry, heating and transport. That is why Habeck has already traveled to Namibia to visit a project there for green hydrogen, which is then to be imported to Germany as ammonia. That’s expensive. It would be much cheaper to use solar and wind power directly on site Namibia to use.

The inconvenient truth is that it would probably be most efficient to outsource some of Germany’s energy-intensive industries – to sun- or wind-rich countries like Namibia. But that is politically completely unthinkable at the moment. So now the domestic industry is subsidized.