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Coalition Unveils Industrial Power Subsidy, Gas-Plant Tenders and Air Tax Cut as Pension Push Faces Backlash

EU clearance is still required and pressure is mounting in parliament from younger Union MPs and 32 business groups over the costly pension bill.

Overview

  • Leaders set a subsidised electricity price of about 5 cents per kWh for energy‑intensive firms from 2026 to 2028, with talks in Brussels described as largely concluded and annual costs estimated at €3–5 billion from the Climate and Transformation Fund.
  • The power‑plant strategy foresees auctions in 2026 for roughly 8 gigawatts of new gas‑fired capacity, slated to start operating by 2031 and designed to be convertible to hydrogen, pending EU state‑aid approval.
  • The government plans a Deutschlandfonds to attract private capital for industry, energy and startups, with Finance Minister Lars Klingbeil and Economics Minister Katherina Reiche set to detail the vehicle in the coming days.
  • The air ticket tax will be reduced from 1 July 2026, providing around €350 million in relief for the aviation sector, with any revenue shortfall booked in the transport budget.
  • Thirty‑two economic and employer associations urged parliament to halt the pension package, warning of up to €480 billion in extra costs by 2050, as an 18‑member youth bloc in the Union threatens to block passage and the SPD rejects reopening the deal.