The Czech energy-intensive industry urgently needs government support to raise energy prices following Germany's announcement of electricity price caps, which will disrupt the European single market and damage Czech competitiveness, according to the Czech and Slovak steel producers association Steel Union.
The German government plans to limit electricity consumption to 5 euro cents (6 US cents) per kilowatt hour from January 2026 to the end of 2028, which will cost 6.5 billion euros (7.5 billion dollars), Kallanish notes.
Trinecke zelezarny (TZ), currently the only steel producer in the Czech Republic, consumes about 1 TWh of electricity per year. While German steelmakers will pay 50 euros per MWh as a result of the subsidies, producers in the Czech Republic pay about twice as much, which means unprofitable costs for Trinecke zelezarny of about 3-4 billion Czech crowns (140-190 million dollars) annually, the association notes.
"We understand the German government's support as an attempt to stabilize the industry at a time of high costs and uncertain energy policy. Without comparable conditions The Czech steel industry will be unstable in the long run. If the government does not provide clear support, there is a risk that steel production in the Czech Republic will cease. This will mean the loss of not only jobs, but also part of our industrial self-sufficiency," says Roman Heide, Executive Director of TZ.
Brussels has given member states the opportunity to adopt temporary national measures to support industry, including energy subsidies and investment incentives, as part of the new clean industry agreement.
"However, this is gradually shifting responsibility for industrial policy from the European to the national level, and the stronger the state is in terms of budget, the more it can protect its companies. The original goal of the European Green Agreement was to create equal conditions for everyone in the European Union. However, now these rules are fragmented in accordance with the capabilities of national budgets," the steel producers' union notes.
"Thanks to the new tariff, German industry will receive energy at about half the cost of Czech companies. For such a closely interconnected region as Central Europe, this poses a systemic risk," concludes Marcela Kubalova, Chairman of the association.
Adam Smith Austria
Kallanish.com
