Energy crisis: gas price cap: balancing act between relief and incentive to save

The gas price brake planned by the federal government has triggered a debate about its concrete implementation.

Energy crisis: gas price cap: balancing act between relief and incentive to save

The gas price brake planned by the federal government has triggered a debate about its concrete implementation. One of the sticking points is the question of how savings incentives can remain despite the billions in relief.

According to the Federal Network Agency, the support must apply for a period of almost two years. "We will be in some kind of tense situation at least until the summer of 2024," said Netzagentur President Klaus Müller in a podcast by Baden-Württemberg Finance Minister Danyal Bayaz (Greens). The gas price cap will "certainly" be needed by then.

The amounts of Russian gas that would have to be replaced are "huge," said Müller. First of all, the six liquid gas terminals and the connection to the hinterland would have to be built so that a lot of gas could flow from Belgium, France and Norway to Germany. "It just takes time." The head of the network agency recommended that the government quickly present a model for a gas price brake. "Politicians will have to have the courage to implement a quick and easy-to-administrate model at least for this winter of 2022/2023."

Müller fears that there will be a lot of arguments about where to draw the line for the lid. "There will have to be a certain lump sum that will be a touch unfair." Because the municipal utilities would not know how many people live in a household. That's why a calculation per capita is no longer necessary. There will have to be a solution "where perhaps not all questions of individual justice are regulated, otherwise it will be so complex that nobody can implement it." The model can still be refined for the winter after next.

Müller for relief, but also for savings incentives

Müller believes it is right to relieve citizens of the sharp rise in gas costs, but also insists on incentives to save. Otherwise "we are faster than we would all like, just in a shortage situation". The Network Agency President once again called on the population to save energy. "If we don't manage to achieve at least 20 percent savings in private households, then we won't be able to get by in an average winter without cuts in industry."

The German Association of Cities also called for savings and warned the federal and state governments to remain united before talks this Tuesday in the Chancellery. The gas price brake must "now be cleverly designed very quickly," said City Day President Markus Lewe (CDU) to the newspapers of the Funke media group. If private households got a basic requirement of 80 percent of the gas consumption at a discount, the incentive to save would remain.

But not only consumers are in demand: With a so-called gas auction model, the federal government wants to give industry incentives to save gas and make it available for heating, for example, for a fee. The model started at the weekend, as the German Press Agency learned from the Ministry of Economics.

On Thursday, the traffic light coalition announced a new "defense shield" of up to 200 billion euros to support consumers and companies because of rising energy prices. The controversial gas levy is off the table - there should be a gas price brake for that. At least for part of consumption, the prices should be capped in such a way that private households and companies are not overwhelmed. What that means exactly is still unclear. A commission is to make proposals by mid-October.

Lindner defends billion-dollar relief package

On the fringes of a meeting of the euro finance ministers in Luxembourg, Federal Finance Minister Christian Lindner defended the scope of the package and also spoke explicitly of a term. "The measures are appropriate in proportion to the size of the German economy and the term up to 2024," said the FDP politician. They correspond to what other countries in Europe have introduced and are therefore "certainly not oversized." Lindner was reacting to criticism from Italy, Spain or Luxembourg, for example, that not all countries had the financial means for such measures and that the internal market could therefore be distorted.

Lindner had previously told the "Rheinische Post" that he "didn't want to exhaust the 200 billion if possible". The FDP youth organization had asked the government for an end date for the program.

Gas in case of shortage also for international corporations?

Opposition politicians expect clarity from the federal government about the distribution of gas in the event of a shortage. "The very expensive gas bought in our storage facilities has to reach German consumers in winter. The traffic lights must finally present a withdrawal plan for this," said Jens Spahn (CDU), the Vice President of the Union faction, in the "Bild am Sonntag". The left-wing parliamentary secretary Jan Korte criticized the Funke media group that the government was silent about "according to which criteria the gas should be distributed in the event of a crisis".

The report by "Bild am Sonntag" also points out that the gas stored in Germany is not reserved for German consumers and companies, but can also be awarded to internationally active corporations. However, the Ministry of Economics sees no reason for criticism. Anything else would ignore the requirements of the European single market, a spokeswoman said on request. "Mutual solidarity" applies.

According to calculations by the International Energy Agency IEA, in order to keep gas reserves in the EU at an appropriate level until the end of the heating season, demand would have to be reduced by 9 to 13 percent compared to the average of the past five years. Without reduced gas consumption and with a complete Russian supply stop from November, the storage levels could drop to almost five percent if only little liquid gas is delivered to the EU at the same time. Then there would be an increased risk of supply disruptions during a late cold snap.

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