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German government to spend record €29.5 billion on electricity subsidies in 2026

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The German federal government will spend €29.5 billion next year to reduce electricity prices for businesses and private households. This amount represents a record level.

This figure was determined according to calculations made by the German Economic Institute (IW) for the newspaper Handelsblatt. IW energy expert Andreas Fischer stated in an interview that very high subsidies are currently being paid to keep electricity prices under control.

“However, in the long term, this is a very expensive solution and does not solve the root of the problem,” Fischer said.

According to the IW executive, a more efficient expansion of electricity grids and renewable energies could help lower electricity prices.

Fischer is not alone in his criticism. A report published in early December by the expert commission for monitoring the energy transition states that affordable energy for households and businesses is extremely important to prevent industrial relocation and ensure broad acceptance of the energy transition.

However, according to the commission’s report, measures that reduce system costs and thus increase the efficiency of the energy transition should take priority over aid provided from state funds.

The Expert Commission on the Monitoring of the Energy Transition is an independent body appointed by the German government that evaluates the progress of the energy transition annually. The commission is chaired by energy economist Andreas Löschel, who is based in Bochum.

The €29.5 billion amount calculated by the IW includes the loss of revenue resulting from the German government’s reduction in electricity tax (€3.9 billion), funds allocated for the industrial electricity price that will be effective from 2026 (€1.5 billion), and the planned subsidy for transmission grid fees amounting to €6.5 billion.

In addition, €3 billion has been allocated for electricity price compensation. This tool has been in use since 2014.

Approximately 340 companies benefit from this compensation. These companies receive compensation because electricity producers pass on the costs of purchasing emission permits, which they need to operate gas or coal-fired power plants, to their customers.

Large industrial electricity consumers receive a portion of these costs back. The federal government plans to expand the scope of beneficiaries and increase compensation.

In addition, there is a financial requirement of €14.6 billion estimated by transmission system operators for the promotion of renewable energies under the Renewable Energy Sources Act (EEG).

However, the exact amount cannot be predicted with certainty. This amount depends largely on the state of wholesale electricity prices.

The total of €29.5 billion for 2026 is significantly higher than the amounts in previous years. According to the IW, public funds to finance the electricity system reached only €4.13 billion in 2020.

This amount consisted of €3.3 billion for exemptions from the electricity tax and €830 million for electricity price compensation. This analysis does not take into account the financial expenditures for emergency measures during the 2022 and 2023 energy price crisis.

Politicians want to help lower electricity prices with these payments of billions of euros. Electricity prices in Germany have been at very high levels for years compared to other European countries.

This situation applies both to the electricity prices paid by private households, businesses, trade, and service companies, and to industrial electricity prices.

There are various reasons for the high electricity prices. The expansion of electricity grids has become a major cost factor. Grid operators have already invested enormous amounts and will have to spend hundreds of billions of euros in the coming years to make them suitable for the energy transition. For electricity consumers, this is reflected in increasing grid fees.

In addition, tens of billions of euros are spent annually for the expansion of renewable energy. For this reason, one of the measures taken in the past to reduce prices was the complete removal of the surcharge under the Renewable Energy Sources Act (EEG) in mid-2022.

In 2021, an average household still had to pay an EEG surcharge of 6.5 cents per kilowatt-hour. For an average household with a consumption of 3,500 kilowatt-hours, this meant an EEG cost of €227.50. Today, these funds are provided from the Climate and Transformation Fund (KTF).

The current federal government has decided to take additional aid measures. These include the industrial electricity price, which will come into effect at the beginning of the year. However, the aid measures fall far below the expectations of companies. Companies will be able to reach the promised price level of 5 cents per kilowatt-hour for only a portion of the electricity they consume.

The federal government coalition also failed to fulfill its promise to reduce the electricity tax for all consumer groups to the minimum level allowed by European laws. Instead, it insisted on the reduction for industry, agriculture, and forestry, which had essentially already been decided by the previous government.

Last summer, Federal Finance Minister Lars Klingbeil (SPD) announced that there was not enough money for more comprehensive aid measures.

However, the government fulfilled its promised €6.5 billion subsidy to reduce electricity transmission grid fees.

Despite the record amount, the government is still unable to fulfill its promises. In this context, the warnings of experts to reduce the overall costs of the system instead of spending billions of euros for price reductions are becoming even more important.

Federal Economy Minister Katherina Reiche (CDU) is trying to take this point into account. In recent months, she has repeatedly emphasized that she wants to make the energy transition more efficient.

In mid-September, Reiche presented ten key measures designed to help reduce the costs of the overall system.

The measures include a change in the promotion of renewable energies and a greater focus on grid expansion in the expansion of renewable energies.

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EU divisions deepen over who should negotiate with Vladimir Putin

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As the US continues to mediate talks between Ukraine and Russia, the debate within the EU over who will sit at the table is intensifying.

Negotiations between Russia and Ukraine scheduled for next week in Abu Dhabi, mediated by the US, will take place without European participation.

There are currently no expectations of a breakthrough, but this has not prevented infighting within the EU over representation.

Italian Prime Minister Giorgia Meloni added fresh friction to the debate yesterday, 5 November, stating that the EU gives “the impression of a Europe moving in different directions.”

In a letter to European Council President António Costa, she argued that the 27 EU leaders must unite behind a single representative before the end of the year.

According to Rapporteur, an “alphabet soup” of diplomatic formats, such as the E2, E3, E5, or the CoW (Coalition of the Willing), is competing to take centre stage in discussions concerning the future of Ukraine.

Facing elections next year, Meloni has long pushed back against the assertive stance adopted by the E3 format, which brings together the UK, France, and Germany, in their efforts to represent European interests in ending the war and shaping the continent’s future security architecture.

Last month, the Italian leader said:

“If France, Germany, and Great Britain believe that within that renowned E3 format they can achieve more alone than we can all achieve together, then they should at least do so in the name of everyone, with an official mandate from all parties.”

An EU diplomat remarked: “When we speak of the E3, we are talking about geopolitical influence, military strength, and financial power. This does not mean Italy is excluded, but Rome clearly believes it must have a seat at the table.”

Meloni has the backing of Poland, another major military power and the only other large EU country sharing a border with Ukraine.

However, her counterpart Donald Tusk has been less explicit about seeking a direct role in top-level talks.

“As you know, we have many different formats,” Tusk told reporters in Warsaw on Thursday. “We have a clear position as the EU and as the Coalition of the Willing. I am fully engaged in these processes.”

Foreign Minister Radosław Sikorski, however, proved considerably more outspoken. “The last thing we want is Western Europe dealing with Russia while bypassing Eastern Europeans,” Sikorski said, drawing parallels to the 1930s and the 1945 Yalta Conference:

“You cannot exclude Eastern Europe and Scandinavia from these talks. We are roughly 120 million people. Finland borders Russia, Norway borders Russia, the Baltic states border Russia, and Poland borders both Russia and Ukraine.”

Berlin argues that the E3 remains the natural representative group, given that Germany, France, and the UK are the three strongest military powers capable of underwriting future security guarantees for Ukraine.

Like Italy, Poland favours the E5 configuration, which would allow Warsaw and Rome to take part.

Yet Sikorski also floated another leadership lineup to meet Putin: António Costa, EU foreign policy chief Kaja Kallas, and UK Prime Minister Andy Burnham.

Sikorski argued that under EU treaties, the Costa-Kallas pairing holds the legal authority to represent the bloc.

Speaking to journalists in Lisbon on Thursday, the EU’s top diplomat, Kaja Kallas, said: “I agree with Prime Minister Meloni; we must not speak with different voices. We must remain united in stating that these matters sought by Russia require Europe’s decision as well.”

Meloni is not alone in pointing out cracks in the EU’s posture. Last week, Danish Prime Minister Mette Frederiksen, a close ally of Meloni on the European Council, questioned a phone call made to Putin by the leaders of Finland and Norway, asking what they truly hoped to achieve.

Finnish President Alexander Stubb and Norwegian Prime Minister Jonas Gahr Støre defended the conversation as a useful step taken in full coordination with Kyiv.

According to an EU official, the pair would be “more than happy” to discuss appointing a special envoy for Ukraine.

The official stressed, however, that the call was not “a bid” to position Stubb and Støre for the role.

Regardless, the war is unlikely to end this winter, even as Europeans explore fresh mechanisms to finance Ukraine.

“We must be realistic about peace talks and extremely cautious regarding Russia’s true intentions,” Donald Tusk said. “During the winter months, Putin may have less motivation to reach an agreement.”

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EU urges citizens to prepare 72-hour survival kits for crises

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European Union citizens should be prepared to meet their basic needs independently for the first 72 hours of an emergency until public services can organize relief, according to new guidelines.

Hadja Lahbib, the European Commissioner for Equality, Crisis Management and Preparedness, presented the non-binding advisory guidance at the European Civil Protection Forum.

In her remarks on the initiative, Lahbib said: “When a disaster strikes, the first hours can be vital. Every European must know what to do, how to protect their family and how to help others. Preparedness begins in our homes, our schools and our communities.”

The Brussels leadership explained that the new measures are prompted by Europe facing increasingly frequent and complex crises.

Under the recommendations, the European Commission advised citizens to stockpile essential supplies and keep pre-packed emergency grab bags ready.

These steps aim to ensure that individuals can address their primary necessities independently during the first three days of a crisis, before state aid is mobilized.

The guidelines also encompass three additional priority areas: preparing children for emergency situations, making safety measures accessible to individuals with disabilities, and ensuring the public is better informed about potential threats.

Citing the 2001 founding anniversary of the EU Civil Protection Mechanism, the European Commission also proposed designating 23 October as “EU Preparedness Day” each year starting in 2027.

EU member states are preparing for an extensive hybrid attack scenario that could result in casualties, according to a Politico report citing European diplomats and officials.

The report noted that divisions have emerged within the EU over the bloc’s security role and whether its initiatives duplicate the functions of NATO.

According to the same report, ambassadors from the 27 EU member states held closed-door meetings focusing on deploying emergency response teams and allocating resources from EU funds to an affected country.

Following the outbreak of hostilities in Ukraine in 2022, both the EU and NATO intensified their preparations for a potential military confrontation with Russia.

In its “White Paper on European Defence – Preparedness 2030”, presented in March 2025, the European Commission identified Russia as one of the primary threats to European security.

The document outlines plans to boost defence production and improve air and missile defence, unmanned systems, and military mobility.

Meanwhile, Estonia, Latvia, and Lithuania have begun drafting contingency action plans for a potential Russian attack, including measures for the evacuation of hundreds of thousands of civilians.

The three Baltic states decided in May 2025 to cooperate in the field of civil defence.

Lieutenant General Christian Freuding, head of the German Army, also stated that Berlin must be prepared for a Russian attack by 2029 or earlier.

On the other hand, Russian President Vladimir Putin stressed in a statement in September that Moscow is not preparing for war with Europe.

Putin stated that Moscow has no such plans and that there are no justifications or real reasons to escalate the situation with Europe.

Criticising the European stance, Putin described rhetoric from European nations regarding a Russian threat and the necessity of preparing for war as a “provocation” and a “deliberate incitement of the situation.”

The Kremlin also noted that the EU is turning into a “military-political-economic bloc” by spending vast budgets to weaponize its economies.

Russian Foreign Minister Sergey Lavrov warned that statements by EU nations regarding the risk of war with Russia are driving European rearmament, which could ultimately become a “self-fulfilling prophecy.”

In earlier remarks, Lavrov assessed that “if Europe attacks the Russian Federation, it will be a completely different war, and it will be over very quickly.”

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Paris meeting between Marine Le Pen and Nigel Farage unscheduled

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Plans for a meeting in Paris between Reform UK leader Nigel Farage and French far-right National Rally (RN) figurehead Marine Le Pen remain uncertain.

Farage’s planned visit to France, which he announced for October as part of an effort to establish ties with figures on the European right before the end of the year, has yet to be officially scheduled by Le Pen’s camp.

Speaking to Politico on condition of anonymity to discuss sensitive inter-party relations, four National Rally officials familiar with Le Pen’s schedule said no visit to the party leader had been planned.

Multiple party figures said they saw no urgency in drawing media attention to relations with Reform UK or to the migration pact signed in September.

One official noted that the “costs and benefits” of holding a meeting with Farage needed to be weighed.

Political circumstances for both parties have shifted markedly since the prospect of a meeting with Le Pen, widely viewed as the candidate most likely to win the first round of the 2027 French presidential election, was first mooted.

Jordan Bardella, the National Rally’s second-in-command, attended Reform UK’s conference in Birmingham in early September as guest of honour.

Bardella and Farage announced an agreement proposing the return to France of all migrants reaching the UK through unauthorised Channel crossings in small boats.

The proposal triggered a backlash across different political factions in France, where critics questioned why the country should accept the return of asylum seekers.

Internal problems also emerged within Reform UK during the Birmingham conference.

Reform UK, which had maintained its polling lead over the Labour Party led by Andy Burnham, who took over as prime minister from Keir Starmer, was shaken by an undercover investigation published on the eve of the conference.

The development, which raised fresh questions over the party’s financial structure, led to the resignation of Farage’s two most senior aides.

Labour subsequently recovered in the polls, while a rise in the Conservative Party’s share of the vote began to challenge Reform UK’s second-place standing.

The initial announcement that Farage would travel to France to meet Le Pen before the end of October was also made at the Birmingham conference in early September.

Referring to a trip to Paris after Bardella delivered a speech in English, Farage said: “The only downside is I think they’re going to invite me to Paris, and I will have to speak French, but never mind, we’ll get round it.”

However, no official invitation has been confirmed.

As October drew to a close and it became clear that Farage would not pay a return visit to the National Rally’s conference in Orleans, a senior Reform UK official maintained that the meeting was on the calendar for this year.

The leadership in Paris does not confirm that schedule.

The four officials familiar with Le Pen’s plans said they were unaware of any scheduled visit for Farage before Christmas. One of Le Pen’s advisers suggested that a meeting could instead be offered with Bardella, whose standing inside the party has weakened in recent months.

Questioning the merits of the party leader appearing alongside Farage, another adviser to Le Pen said: “We need a bit more time to think through the costs and benefits.”

Thibaut Francois, an official with the National Rally’s European Parliament delegation, said that “regular contacts” with Reform UK continued and that the two parties would meet “very soon”, though he did not clarify whether that would take place this year.

A senior Reform UK official said: “Reform’s primary objective is to become battle-ready for British elections; parading on the international stage right now would add nothing to the UK message.”

Charles-Henri Gallois, an economic adviser to Bardella, argued that there was no need for further contact between the two parties, asserting that the migration agreement was “ready and waiting to be implemented” should both parties come to power.

“There is no need to discuss this further,” Gallois told Politico. “Critics of the agreement do not understand migration flows. This agreement is entirely in France’s interest.”

With French voters wary of a UK-style exit, Le Pen has long distanced herself from efforts to pull France out of the European Union.

Jean-Yves Camus, a far-right specialist at the Jean-Jaures Foundation think-tank, said: “Farage still supports Brexit, whereas Le Pen abandoned the idea [of Frexit] because it was too frightening for French voters. Donald Trump’s defeat in the midterms will also reinforce Le Pen’s distrust of Trumpism and its European counterparts.”

The level of internal support within the National Rally for the migration deal signed by Bardella and Farage was a subject of debate even as it was being concluded.

Since the party conference in September, Bardella’s position has continued to weaken following antisemitism allegations, which he has firmly denied.

Before reaching the agreement with Bardella, Farage had proposed launching “the largest military operation in the Channel since the Second World War” to push small boats back to the French coast.

A figure close to Le Pen told Politico at the time: “Why would we take [them] back to France if they are not French?”

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