EU Approves Expansion of Germany's Electricity Price Compensation Scheme – 20 Additional Sectors to Benefit

Berlin — The European Commission has approved a significant expansion of Germany's electricity price compensation scheme for energy- and trade-intensive companies, which has been in place since 2013. The number of sectors eligible for the scheme will grow from 11 to 31.

The electricity price compensation is not a general subsidy for electricity costs incurred by energy-intensive industry. The instrument, which has existed for more than a decade, reimburses companies for part of the indirect CO₂ costs that electricity suppliers pass on to customers through electricity prices as a result of the European Emissions Trading System (EU ETS). The expansion of the scheme is intended to strengthen the competitiveness of energy- and trade-intensive companies and to prevent energy-intensive production from relocating to countries with less stringent climate protection requirements, a phenomenon known as carbon leakage.

EU Significantly Widens Circle of Eligible Companies

This is the first time since the electricity price compensation was introduced in 2013 that the circle of eligible sectors has been expanded to this extent. The scheme will now cover 31 sectors, up from 11 previously. At the same time, the state funding intensity for companies already eligible will rise to up to 80 percent of eligible indirect CO₂ costs. The newly included sectors include companies in the organic chemicals and glass industries, among others. Companies can apply for the electricity price compensation retroactively for the 2025 billing year. The revised funding guideline will take effect once published in the Federal Gazette (Bundesanzeiger).

German Federal Minister for Economic Affairs Katherina Reiche described the decision as an important contribution to securing Germany as an industrial location.

"An expansion of this scale has never happened before. Twenty additional sectors are being added to the previous eleven, bringing the total to 31 sectors. That is more sectors and companies than ever before. This preserves industrial value creation in Germany and secures good jobs," said Katherina Reiche, German Federal Minister for Economic Affairs.

German Federal Minister for the Environment Carsten Schneider also described the decision as a contribution to industrial transformation.

"With the expanded electricity price compensation, we are strengthening precisely those companies that compete internationally while also investing in the transformation. This creates planning certainty for companies, secures industrial value creation, and keeps us on course toward climate neutrality," said Carsten Schneider, German Federal Minister for the Environment.

Compensation Offsets Indirect CO₂ Costs

Indirect CO₂ costs arise because electricity producers must purchase emissions allowances under the European Emissions Trading System and pass these costs on to customers through electricity prices. Electricity-intensive companies therefore bear this CO₂ surcharge indirectly through their electricity bills, even though they do not themselves cause the emissions from power plants.

The amount of electricity price compensation is calculated using a uniform methodology applied across Europe. This is based on factors including a company's electricity consumption, product-specific efficiency benchmarks, and a CO₂ emissions factor for electricity generation set by the European Commission. Depending on the sector and efficiency level, a proportional share of the eligible indirect CO₂ costs is reimbursed. With the newly approved expansion, the maximum funding intensity for certain companies will rise to up to 80 percent. The electricity price compensation is financed from the federal budget.

Source: IWR Online, 16 Jul 2026