Germany is concerned that a core plank of its plan to boost industrial output and breathe life into its struggling economy will run afoul of EU law.

A leaked internal paper from Germany’s economy ministry, first reported by Handelsblatt, reveals mounting concern that the European Commission could block a subsidized electricity price for energy-intensive industries — one of the new coalition government’s flagship projects. 

The plan, championed by Economy Minister Katherina Reiche, is central to Chancellor Friedrich Merz’s push to revive Germany’s struggling industrial base. But according to the memo, obtained by POLITICO, “the implementation of the concept poses considerable challenges under EU state aid law.”

“The reservations are considerable and the prospects of approval are highly uncertain,” the document further says.

Reiche has yet to formally approve the draft, which was submitted to her last week.

For Germany’s heavy industries, relief from soaring electricity prices is long overdue. But after years of failed attempts, first under former Vice Chancellor Robert Habeck, then ex-Chancellor Olaf Scholz’s administration, frustration is building.

Now, with production shifting abroad and competitiveness eroding, Berlin is hoping Brussels can still be swayed.