High prices and bureaucratic hurdles in the energy transition are threatening to have increasingly negative consequences for Germany as an industrial location. The migration trend, especially among industrial companies, is becoming more entrenched, said the German Chamber of Industry and Commerce (DIHK), citing a survey of companies.

Jürgen Kerner, second chairman of IG Metall, told the German Press Agency: “The DIHK study shows once again what has long been obvious: electricity prices in Germany are a problem for jobs in industry.”

According to a DIHK survey, four out of ten industrial companies are currently considering limiting their production in Germany or relocating it abroad due to the energy situation. Among larger industrial companies with more than 500 employees, more than half are now considering this. According to the DIHK, around 3,300 companies took part in the survey.

Companies criticize perspective

Politicians have so far failed to show companies a perspective for a reliable and affordable energy supply, said DIHK Deputy Managing Director Achim Dercks. “While in the years before 2023 many companies also saw opportunities in the energy transition for their own operations, in their view the risks have recently clearly outweighed the benefits.” High energy prices are increasingly becoming an obstacle to production and investment.

The increasing plans to limit and relocate production and the actual relocations show that the energy policy location conditions are now a clear competitive disadvantage for all companies in Germany, according to the DIHK. This applies in particular to industry, to industrial companies with high electricity costs and to large companies, for example in mechanical engineering and the production of industrial goods. Companies are relocating production to France and other European countries as well as to the USA and China, said Dercks.

High prices and bureaucratic hurdles

Dercks said that electricity prices are significantly higher than before the start of Russia’s war of aggression against Ukraine, and gas prices are also significantly higher than in the USA, for example. Looking ahead is even more important. There is a lack of perspective. There is no clear concept for companies, and the crucial question is: “Do I create trust and confidence, which will then lead to investment?” Companies are responding to more bureaucracy, more reporting requirements, and complicated approval procedures.

Demand for state aid

The DIHK called for taxes and duties on electricity to be reduced. Surcharges should be financed from the federal budget. The permanent reduction in electricity tax for the manufacturing industry provided for in the growth package should be extended to all sectors.

The German government had cut a federal subsidy of around 5 billion euros for the electricity grids in order to save money. Dercks said that this was a lot of money. But if the industry left Germany, we would have a completely different problem, because that would cost growth.

IG Metall warns of migration

Kerner said: “The measures that the federal government has taken so far are correct, but are far from sufficient. Competitiveness is no longer possible under these conditions.” A subsidized industrial electricity price for energy-intensive industries is urgently needed, as has long been the practice in other European countries. “It would be fatal if in a few years – after the expansion of renewables and the networks required for them – there is enough cheap electricity available, but important companies and jobs have moved abroad or have never been created here in the first place.”