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ENERGY

Germany may place caps on gas use in winter, warns minister

As Russia continues to stem the flow of gas into Europe, the German Economics Minister believes emergency measures may have to be in place over winter.

Economics Minister Robert Habeck
Economics Minister Robert Habeck (Greens) gives a talk in Denmark on June 25th. Photo: picture alliance/dpa/Ritzau Scanpix Foto | Bo Amstrup

Economics Minister Robert Habeck (Greens) has warned that the government may have to step in to regulate gas usage if there are shortages this winter.

Over the colder months there is a “medium-term” threat of a scenario in which “reductions (in gas usage) will actually have to be imposed by law,” Habeck said before a meeting with other EU energy ministers in Luxembourg on Monday.

Such a reduction would lead to “a severe economic crisis” in Europe and Germany, he said. 

The minister did not say who exactly could be affected by reductions.

READ ALSO: German environmentalists call for caps on energy usage

He said this would depend on the specific situation and how cold the winter would be, where there were “regional supply bottlenecks” and on calculations about which industries were involved in different supply chains.

At the same time, Habeck stressed that “solidarity-based” and “very quick action” was necessary to avoid such a scenario.

Aid alliance with EU neighbours

In order to avoid caps on gas usage, the rapid expansion of renewable energy sources and the increase of energy efficiency “could be decisive components”, Habeck added.

At the meeting in Luxembourg, the EU energy ministers are discussing these two issues as parts of the EU’s planned “Fit for 55” climate package.

EU Energy Commissioner Kadri Simson, who is attending the meeting, said that 12 of the 27 member states – including Germany – are currently receiving less gas from the Russian energy company Gazprom. 

Though Gazprom has claimed that the reductions in gas supply to Germany are due to repairs on the Nord Stream 1 pipeline, Berlin has accused the Kremlin of using gas as a ‘weapon’ to punish allies of Ukraine. 

READ ALSO: ‘Scarce commodity’: Germany raises gas alert level as Russia reduces supply

In the event of a crisis this winter, the government said it would form an aid alliance with neighbouring countries such as the Czech Republic, Austria, Poland and also France.

“We would not make any progress at all if we could not fall back on France, Belgium, the Netherlands and Norway, who are supporting us,” said Habeck.

Algeria is also increasing the quantities of gas supplied via Italy.

“We are dependent on solidarity here,” said the Green politician.

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ENERGY

Germany to spend €200 billion to cap soaring energy costs

Germany is to ditch plans for a gas levy on consumers and introduce a gas price cap to curb soaring bills, Chancellor Olaf Scholz announced on Thursday.

Germany to spend €200 billion to cap soaring energy costs

The government will plough €200 billion into shielding households and businesses from skyrocketing energy costs in the wake of the Russian invasion of Ukraine.

“The German government will do everything so that prices sink,” Scholz said at a press conference via video link because he is currently isolating due to a Covid infection. He said the package includes a gas price cap and a plan to cream off windfall profits made by some energy companies.

The package is designed to ensure that Germany can contend with the fallout from rising prices “this year and next year and the one after that”, Scholz said.

As expected, the controversial gas levy plans are being shelved. The government had been planning to pass on some of the soaring costs of energy to consumers from October to prop up struggling suppliers.

READ ALSO: Will Germany set a gas price cap – and how would it work?

With electricity and gas prices spiralling upwards, the leaders of Germany’s 16 federal states on Wednesday called on the government to introduce an energy price cap.

Several other politicians – also within the government’s own traffic light coalition – had also urged for the levy to be scrapped and a price cap to be introduced.

Scholz said there should be no extra burden for consumers and companies. “With the €200 billion, we have the means to finance all of this,” he said, adding that the gas levy was no longer needed. 

Protection from rising prices was needed for “pensioners, workers, families… but also bakers and craftsmen or big industrial plants that are dependent on electricity and the gas supply”, Scholz said.

Scholz pointed out that gas storage facilities in Germany are currently more than 90 percent full. “We will do everything we can to use the storage facilities for the winter,” he said. 

‘Energy war’

Germany, which has been highly dependent on imports of fossil fuels from Russia to meet its energy needs, has been battling to find other sources as supplies dwindle.

Thursday’s announcement came as inflation in Germany soared to a 70-year high of 10 percent in September, according to official data, driven higher by spiking energy prices.

“We find ourselves in an energy war over prosperity and freedom,” Finance Minister Christian Lindner said at the press conference.

A person turns down the radiator in Germany. Gas bills are set to rise significantly.

A person turns down the radiator in Germany. Photo: picture alliance/dpa | Marcus Brandt

Protecting consumers against the rising bills was a “crystal clear answer” to Russian President Vladimir Putin that Germany was “strong economically”.

The gas price cap should cover “at least a part” of the gas used by households and businesses, while “maintaining an incentive to reduce gas use” over the winter as supplies are limited, the government said in a statement.

At the same time, the government would work to limit the price of electricity for consumers by skimming off profits made by energy firms that have profited by the higher asking prices for gas but which do not use the energy source to generate power.

The gas levy would have seen 2.4 cents per kilowatt hour added to gas bills, adding an extra burden of several hundred euros per household. The government announced it would also reduce VAT on gas consumption to seven percent, down from the usual 19 percent. 

There had been major controversy over the surcharge after it emerged that some companies registered to receive a share included firms that have not been struggling in the current situation. 

Economics and Climate Minister Robert Habeck admitted mistakes in the design of the levy and he had pledged to change it. 

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