On September 3, the federal cabinet decided on new steps to permanently reduce energy prices. These relief measures will benefit not only consumers but also, and especially, energy-intensive industries such as the steel sector.
For steel producers, who suffer greatly from high energy costs in international competition, the permanent reduction of the electricity tax is a key signal. Companies in the sector will in future pay only the European minimum tax rate, which strengthens their competitiveness compared to producers in countries with lower energy costs. In addition, the federal government is subsidizing grid fees. Since the steel industry consumes particularly large amounts of electricity and is therefore heavily burdened by grid fees, this measure will mean a noticeable cost reduction. The abolition of the gas storage levy on August 6 also provides relief—particularly where gas is used in production processes.
Three Central Relief Measures
To reduce energy prices, the federal government has now introduced three key measures. First, the electricity tax for companies in the manufacturing sector as well as in agriculture and forestry will be permanently reduced. For 2026, tax revenue losses of 1.5 billion euros are expected, rising to 3 billion euros annually from 2027 onwards. Second, all electricity consumers will receive relief on transmission grid charges. The Climate and Transformation Fund (KTF) earmarks 6.5 billion euros for this purpose in the coming year, and a total of 26 billion euros over the next four years. Third, the costs of the gas storage levy will be eliminated: at the end of 2025, the gas storage levy account will first be balanced with 3.4 billion euros from the KTF, and from 2026 the levy will no longer apply.
Especially for the steel industry, which is massively affected by both high electricity costs and gas prices, these three measures mean significant financial relief and greater planning certainty.
Additional Impetus for Transformation and Innovation
In addition to these direct price reliefs, the federal government is also focusing on future-oriented issues. With the draft of a third law amending the Energy Tax and Electricity Tax Acts, simplifications are being introduced in the field of electromobility, bidirectional charging, and technology-neutral electricity storage. These changes not only encourage investment in charging infrastructure but also set important course corrections for the transformation of the economy. For the steel industry, which must make the shift to climate-neutral production in the long term, such measures provide opportunities to leverage synergies between the energy transition and industrial transformation.
Financial Dimension of the Measures
The reduction in the electricity tax will result in lost government revenues of around 1.5 billion euros in 2026 and 3 billion euros annually from 2027 onwards. In addition, 6.5 billion euros will be provided next year for transmission grid charges, with a total of 26 billion euros over the next four years coming from the Climate and Transformation Fund. These amounts make it clear that the federal government is prepared to deploy substantial financial resources to safeguard the competitiveness of energy-intensive industries—and thus also of the steel sector.
Federal Finance Minister and Vice Chancellor Lars Klingbeil:
“By lowering energy prices, we are securing jobs in Germany. That is my top priority. We are therefore lowering energy prices in the first step so that more than 600,000 manufacturing businesses—from small carpentry workshops to industrial enterprises—are noticeably relieved. Because competitive energy prices are and will remain crucial for a strong business location in Germany. Our measures now create planning and investment security. At the same time, we are already relieving citizens with this first step.”
Significance for the Steel Industry
For the steel industry, which is in the midst of a profound transformation process toward climate-neutral production, stable and predictable energy costs are crucial. The relief measures adopted therefore not only help safeguard jobs and production capacity but also support the implementation of energy-intensive transformation projects that are necessary for a climate-friendly future.
Federal Minister for Economic Affairs and Energy Katherina Reiche:
“Good news for everyone—companies and consumers alike: Starting next year, we will reduce electricity costs by 6.5 billion euros per year—by a total of 26 billion euros over the next four years. High energy prices affect everyone. For our companies, they are a matter of competitiveness. With the subsidy for transmission grid costs decided today, we are providing noticeable relief to electricity customers. And we are permanently reducing the electricity tax for manufacturing companies and the agricultural and forestry sectors. Together with the already decided abolition of the gas storage levy, we are thus implementing a large part of the relief measures agreed in the coalition agreement.”
