Global Trade Alert

On 25 October 2008, the German Bundestag adopted the 'Erneuerbare Energien Gesetz' (EEG), a law to support the development of renewable energies. While every houshold and firm contributes to the additional costs, paragraph 40 allows 'electricity-intensive manufacturing enterprises with high electricity consumption or rail operators' (para. 40, (1) EEG 25.10.2008) to be partially excluded. Furthermore article 40 states that: "This limitation aims to reduce the electricity costs for these enterprises and thereby maintain their international and intermodal competitivenes".
 
The exemption (called 'limit') from the EEG is based on certain criteria specified in article 41:

• the electricity purchased from a utility company in accordance with section 37(1) and used by the enterprises themselves exceeded 10 gigawatt-hours at a certain delivery point
• the ratio of the electricity costs of the enterprise to its gross value added as defined by the Federal Statistical Office, exceeded 15 per cent

 
The measure therefore favors large manufacturing enterprises and discriminates against small domestic competitors as well as international large manufacturing competition.
 
The measured entered into force on 1 January 2009 and was adjusted on 30 June 2011. The above mentioned firms with an electricity consumption over 1 GWh per year receive a 90 % tax relief while a electricity consumption above 10 GWh per year leads to a 99 % relief.
 
On 6 May 2012, EU Competition Commissioner Almunia stated: "German lawmakers are deliberately favoring certain energy-intensive companies, which threatens to distort competition and is apt to obstruct trade between member states". In 2012 , 822 enterprises applied for the exemption, in 2013 the number increased to 2055.
 
On 18 December 2013, the EC informed Germany about its decision to open a formal investigation procedure. The EC finds that the tax relief "seems to be available only when the supplier has purchased 50% of his electricity portfolio from national RES electricity producers and seems therefore to constitute a discriminatory charge within the meaning of Article 110 TFEU" (page 3, 2014/ C37 / 07)
 
Update: 
On 25 November 2014, the EC concluded that the reductions do constitute state aid and that it is mostly compatible with the single market. Some of the reductions received in 2013 and 2014 were, however, in excess of the limits set by the EU and had to be recovered.
Furthermore, on 23 July 2014, the Commission approved the revised renewable energy law EEG 2014 (cf. Related Measures). Hence, this measure is no longer classified as implemented.
 
The Top 5 sectors (more than 75 %) are Chemicals, paper, NE-metals, steel and railways (Greenpeace, BMU 2012).
 
A state measure in the GTA database is assessed solely in terms of the extent to which its implementation affects the extent of discrimination against foreign commercial interests. On this metric, the state aid proposed here is discriminatory