BERLIN, May 5 (Reuters) – The German finance ministry pushed back on Friday against the economy ministry’s plan to introduce a subsidised industrial power price, with a spokesperson saying that the budget did not allow for it and existing funds could not be redirected.

“There are no funds available for this project,” the finance ministry spokesperson said during a regular news conference, shortly after the economy ministry released its plan for a subsidised price of 6 cents per kilowatt hour (kWh) until 2030.

The use of funds from coffers initially created to boost post-pandemic economic recovery – as foreseen by the economy ministry – was “not constitutionally possible”, the finance ministry spokesperson said.

The proposed subsidy would be in place until 2030 and would cost between 25 billion euros ($27.56 billion) and 30 billion euros based on current market prices, according to the plan.

The economy ministry is led by Robert Habeck of the Greens.

Finance Minister Christian Lindner of the pro-business FDP wrote in a guest article for business daily Handelsblatt on Tuesday that such a subsidy would be “economically unwise”, and it would contradict market principles to rely on direct state aid as a means to achieve industrial transformation.

Chancellor Olaf Scholz had also pushed back on the initiative, saying that long-term subsidies were not beneficial for the economy, and a government spokesperson said on Friday that this stance had not changed.

Last year, Berlin introduced electricity and gas price caps to shield industry and households from rising energy prices, but companies in Germany say electricity prices are still too high compared with other countries.

“This would be a clear game changer for our international competitiveness,” the VCI chemical association said of the proposal.

“The industrial electricity price helps us to secure production and industrial value creation and to master the transformation to climate neutrality even better,” it said in a statement.

($1 = 0.9071 euros)

Reporting by Markus Wacket and Friederike Heine, Editing by Rachel More

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