Impact of Reductions and Exemptions in Energy Taxes and Levies on German Industry

This report by the Climate Policy Initiative analyzes how tax exemptions and levy reductions in Germany's energy policy framework impact industrial energy prices. It focuses on four key policies: the Environmental Tax Reform, the Combined Heat and Power Act, the EU Emission Trading Scheme, and the Renewable Energy Act. The analysis finds that these exemptions significantly lower energy costs for large, energy-intensive companies, potentially reducing the policy-induced component of energy prices by up to 75% on average, which may diminish incentives for energy efficiency improvements.

• Tax and levy reductions significantly lower the cost of electricity for manufacturing industries, potentially reducing the policy-induced component of the electricity price by up to 96% compared to regular consumers who face costs of 56€/MWh.
• Manufacturing industries benefit from substantial reductions in energy tax rates for various fossil fuels, with potential reductions of up to 33% for oil, 62% for natural gas, and 55% for liquefied petroleum gas.
• The financial impact of tax exemptions is skewed toward the largest energy consumers; companies using more than 600GWh of energy see the policy-induced component of their energy price decrease by an average of 45% compared to companies consuming only 1MWh.
• For companies qualifying for all available exemptions, the policy-induced component of the energy price can be reduced by up to 75% on an industry average basis.
• The complexity of the policy design—which uses various metrics such as trade intensity, gross value added, and non-wage labour costs—creates significant energy cost differences between companies and complicates political debate.
• The report suggests that these significant tax exemptions may undermine climate goals by reducing the incentive for manufacturing industries to implement energy efficiency improvements.
• Industry sub-sectors with energy mixes relying heavily on electricity, such as basic chemicals and transport equipment, face higher policy-induced energy costs than those relying primarily on fossil fuels, such as basic metals and mineral processing.

APA

Rosenberg, A., Schopp, A., Neuhoff, K., & Vasa, A. (2011). Impact of Reductions and Exemptions in Energy Taxes and Levies on German Industry. Climate Policy Initiative. https://www.climatepolicyinitiative.org/wp-content/uploads/2011/12/Reductions-and-Exemptions-on-Energy-Taxes.pdf

Chicago

Rosenberg, Anja, Anne Schopp, Karsten Neuhoff, and Alexander Vasa. Impact of Reductions and Exemptions in Energy Taxes and Levies on German Industry. Climate Policy Initiative, 2011. https://www.climatepolicyinitiative.org/wp-content/uploads/2011/12/Reductions-and-Exemptions-on-Energy-Taxes.pdf.

Wikipedia

{{cite report |last1=Rosenberg |first1=Anja |last2=Schopp |first2=Anne |last3=Neuhoff |first3=Karsten |last4=Vasa |first4=Alexander |title=Impact of Reductions and Exemptions in Energy Taxes and Levies on German Industry |publisher=Climate Policy Initiative |date=24 November 2011 |url=https://www.climatepolicyinitiative.org/wp-content/uploads/2011/12/Reductions-and-Exemptions-on-Energy-Taxes.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{rosenberg2011impact, author = {Rosenberg, Anja and Schopp, Anne and Neuhoff, Karsten and Vasa, Alexander}, title = {{Impact of Reductions and Exemptions in Energy Taxes and Levies on German Industry}}, institution = {Climate Policy Initiative}, year = {2011}, month = nov, url = {https://www.climatepolicyinitiative.org/wp-content/uploads/2011/12/Reductions-and-Exemptions-on-Energy-Taxes.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }