The European Commission approved Germany's plan to subsidize energy costs for energy-intensive industries through an industrial electricity price worth €3.8 billion, retroactive to January 1, 2026 and running through December 31, 2028.

Companies can apply for the subsidies after each year, with payments based on actual consumption and the average wholesale electricity prices, and the total aid depends on uptake.

Subsidies are designed for eligible sectors such as chemicals, rubber and plastics, glass, cement, and semiconductor manufacturing, with the potential to expand to other sectors later.

Sectors most at risk of relocating production outside the EU, including steel, cement, and chemicals, are targeted for eligibility and relief.

Industry associations react differently: the BDI backs moving forward with careful implementation, while the VCI says terms are too restrictive and may deliver less than 10% of energy costs to most firms.

Germany’s Economy Minister planned to comment on the plan in Berlin later in the day.

Officials see the scheme as a major boost to industrial location and competitiveness, potentially benefiting several thousand companies, though some chemical-industry critics argue the relief is too small to matter.

EU Competition Commissioner described the instrument as advancing climate protection, strengthening Europe’s resilience, and keeping industry globally competitive while facilitating a transition to climate neutrality.

There were prior debates within the coalition about which projects qualify for subsidies and the reinvestment conditions beneficiaries must meet.

The policy follows a coalition decision by CDU/CSU and SPD made in November, with Brussels’ approval now confirmed.

A final step remains: EU Commission directive approval before the plan can be officially announced.

The exact aid amount depends on uptake, with officials projecting a low single-digit billions euro range.