WDK: German carbon tax could trigger “wave of bankruptcy” 

Frankfurt, Germany – Many small- and medium-sized businesses could go out of business if Germany’s’ fuel emissions trading act’ (BEHG) goes ahead in the current format, industry groups have warned.

The BEHG, which came into effect in January, levies tax on businesses for their CO2 emissions, and has been at the centre of major controversy with the German industrial sector.

On 31 March, the German federal government (Bundestag) announced that it was adopting a so-called “carbon leakage ordinance” to provide financial relief for SMEs impacted by the scheme. 

However, the government scheme falls far short of what is required, according to the Alliance for the Fair Energy Transition – a grouping of German industry associations.

In particular, the Bundestag measures and compensation levels will not protect energy-intensive medium-sized businesses, warned  the alliance, which includes the WDK rubber industry association.

In a 22 April statement, the industrial grouping demanded that its member companies be relieved of the additional costs “to a much greater extent than previously planned.”

Moreover, the alliance pointed out that there were currently no guarantees that the provisioned compensations would be made to the SMEs after the first year. 

In addition, its statement noted, that the application process for the relief package was “far too complicated”, while the rebate is conditioned to the availability of budget funds.

In response, the alliance has submitted a six-point rescue plan to the MPs, which it urged the government to adopt while the legislative window is open. 

With “the current ordinance, [Germany’s lawmakers] consciously accept a wave of bankruptcy in their medium-sized industry; with all the consequences that this will have for our economy,” the statement concluded.

The Alliance for the Fair Energy Transition represents around 10,000 German companies across all sectors with around one million employees and €200 billion in annual sales.