A new evaluation by Frontier Economics, together with ETR and Arepo Consult, finds that Germany’s electricity price compensation scheme played an important role in helping energy-intensive industries weather sharp increases in indirect CO₂ costs between 2021 and 2023.

The study was commissioned by the Federal Ministry for Economic Affairs and Energy. 

The Strompreiskompensation (SPK) was introduced to limit the impact of indirect carbon costs passed through to electricity prices under the EU Emissions Trading System. Over the three-year period, total compensation reached around EUR 4.8 billion, with annual payouts rising from about EUR 807 million in 2021 to nearly EUR 2.4 billion in 2023. 

Support was concentrated in a few sectors. The pulp and paper industry received around 28 percent of total aid, while chemical and iron and steel industries each accounted for about 26 percent. More than 95 percent of the funds went to large firms, with small and medium-sized enterprises receiving only a small share. 

To assess economic effects, the evaluation uses firm-level data and micro-econometric methods to compare outcomes for supported firms and relevant controls. Results point to a cushioning effect against economic stress rather than a boost to growth. Profitability (measured by EBITDA) improved relative to comparable European firms. Turnover and asset measures showed mixed effects, particularly when compared with firms in Member States without similar schemes. Employment trends suggest stabilisation rather than significant growth. 

Analysis of electricity use indicates that reductions in consumption were often linked to lower output rather than efficiency gains. In several sectors, median electricity use per unit of output rose, reflecting structural shifts such as process electrification.  

The evaluation concludes that the SPK helped reduce the risk of carbon leakage and supported key industries during a period of exceptional cost pressure. At the same time, the findings underline that the scheme alone cannot secure long-term competitiveness or the structural transformation of energy-intensive sectors. 

The full report is available for download here (in German). 

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