Gas price brake instead of gas surcharge in Germany? In the energy crisis in Germany as a result of the Russian war of aggression in Ukraine, such a brake is increasingly coming into focus in view of the sharp rise in energy costs – and the planned gas levy is becoming increasingly unstable. The DPA news agency reported on Sunday (09/25/2022). Federal Finance Minister Christian Lindner also expressed doubts about the surcharge for millions of customers to compensate for higher gas procurement costs at the weekend. “In the case of the gas levy, I am less concerned with the legal question, but more and more with the question of economic sense,” said the FDP leader according to the “Bild am Sonntag”.
“We have a gas surcharge that increases the price. But we need a gas price brake that lowers the price.” There is a dispute in the federal government about the financing. Further regulations are to come to protect households with payment difficulties from imminent gas and electricity blockages.
Demonstrators in Lubmin demand opening of Nord Stream 2
Over the weekend in Lubmin (Mecklenburg-Western Pomerania), among other places, it was evident that the population is concerned about sharply rising prices in view of the energy crisis. Around 3,000 people demonstrated there for the opening of the German-Russian Nord Stream 2 gas pipeline and for affordable energy.
Nord Stream 2 runs from Russia to Mecklenburg-West Pomerania. The gas pipeline has been completed, but after the Russian attack on Ukraine, the federal government ruled out putting it into operation. Russia is currently no longer sending gas to Germany via the Nord Stream 1 pipeline, which runs largely in parallel, and refers to technical reasons. The Federal Government considers this justification to be a pretense. In this article, we have summarized how electricity prices arise and how they could be regulated.
Energy crisis: Scholz is keeping a low profile on the gas levy
Chancellor Olaf Scholz, who is returning from a trip to the United Arab Emirates (UAE) and Qatar with a liquefied gas agreement with the UAE, has announced proposals to curb gas prices in the near future. It is now a question of “how we can reduce the prices that are far too high, both for electricity and for gas,” said the SPD politician on Sunday on the sidelines of his visit to Qatar. A commission started consultations on Saturday and is doing “very good, constructive” work. “We will also be able to count on quick results.”
The chancellor kept a low profile when he was traveling about the gas levy. However, there have been more and more question marks surrounding this support for suppliers since the federal government decided to nationalize the large gas importer Uniper. For the time being, however, the government wants to stick to the levy, which is to come on October 1 – at least as a “bridge”, as Economics Minister Robert Habeck (Greens) called it. It will still be a few months before the Uniper takeover is completed. At the same time, the department referred to possible financial constitutional risks if the main beneficiaries of the levy were to be in the hands of the state.
The weekend shows: In the energy crisis there is a dispute in German politics about the procedure, the terminology and the distribution of costs. On Sunday, for example, the advance of northern German federal states caused a stir, wanting to pay lower electricity costs because they also produced a large part of the wind energy.
Omid Nouripour speaks of electricity price caps and gas price caps
But back to the gas levy: SPD leader Lars Klingbeil has already demanded that it be put to the test. The parallel debate about putting the brakes on gas prices continued to gain momentum over the weekend. Lindner argued that it would take time before there was help for households, crafts, sports clubs or culture. “A gas price brake must help everyone in an economy quickly.” Green leader Omid Nouripour also campaigned for a price limit on Sunday. “The electricity price cap will come,” he said at a party conference in Landshut, Bavaria. “But of course we also need a gas price cap.” It’s complicated, but you have to deal with it.
Habeck emphasized on Sunday that companies and citizens urgently need relief. “Gas prices have to go down, the costs for the economy and households have to be limited,” he told the newspapers of the Funke media group. But now you have to “raise all the financial strength of the state that is necessary to lead the good substance of our economy through this crisis and to maintain social cohesion”.
Lindner wants to comply with the debt brake in 2023
The question of an additional gas price damper promptly fueled the smoldering debate about the debt brake in the Basic Law, which only allows the federal and state governments to take out new loans to a limited extent. Lindner wants to comply with them again in 2023. “A gas price brake must be combined with long-term stable public finances,” he said. “The debt brake for the federal budget is in place.”
The Greens immediately returned the ball after Lindner’s advance: “The gas levy can go as soon as the Ministry of Finance is willing to offer an alternative. This alternative means: financing from budget funds,” said party leader Ricarda Lang.
Lindner must now deliver and provide the necessary funds to stabilize suppliers and lower energy prices. Capping gas prices for basic needs is the right way to go. There is also pressure from local authorities. “Citizens and companies can no longer bear the rising costs for gas and electricity as well as the high inflation,” said the President of the German District Association, Reinhard Sager, to the newspapers of the Funke media group (Sunday).
Supporting individual energy companies with federal funds is better than the levy. Bavaria’s Prime Minister Markus Söder (CSU) again called for a “cap” for the gas price and a limit for fuel. His Economics Minister Hubert Aiwanger (Free Voters) proposed capping the gas price to eight cents per kilowatt hour in October. The difference to the current price of more than 20 cents should be paid by the state to the energy suppliers.
Government wants to fight against power cuts and gas locks
The government wants to tackle increased protection for households that could be threatened with electricity and gas being cut off in winter. Federal Consumer Minister Steffi Lemke (Greens) told the German Press Agency that the planned electricity price brake will reduce the number of cases in which people can no longer afford their electricity bills. “In addition, we will enshrine a regulation in law that prevents electricity and gas cuts.”
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