Connect with us

Hi, what are you looking for?

Energy

Germany introduces €200 billion gas price cap to counter Russia’s ‘energy war’

BERLIN — The German government will take on €200 billion in fresh debt to implement a gas price cap aimed at shielding consumers and companies from high energy costs, Chancellor Olaf Scholz announced Thursday.

“The German government will do everything in its power to bring [energy] prices down,” Scholz said at a press conference. “We are now putting up a large defensive umbrella … which we will endow with €200 billion.”

The announcement followed days of negotiations between the Social Democratic chancellor, Economy Minister Robert Habeck from the Greens and Finance Minister Christian Lindner from the liberal Free Democrats on how to respond to what Lindner described as an “energy war” launched by Russia.

Under the proposed scheme, the state will set a limit for gas prices and pay the difference between that cap and what gas importers pay on the world market. Major German energy suppliers like Uniper have found themselves in severe financial straits after Russia halted gas supplies to Germany, as it forced them to compensate for missing volumes with expensive last-minute purchases on the world market.

The government previously planned to compensate suppliers for the increased import costs using a gas price surcharge to be paid by customers. But the scheme, which would have increased energy bills for many households and companies, faced strong backlash and became increasingly politically untenable.

The current plan for a gas price cap will require taking on large amounts of new debt — also a politically sensitive issue, with Lindner previously insisting that Germany must adhere to its constitutionally enshrined debt brake next year.

Under the proposed compromise, the government will use a derogation to finalize the gas price cap via a special fund that falls outside the debt brake rule.

Click to comment

Leave a Reply

Your email address will not be published.

You May Also Like

Europe

BERLIN — In a new effort to attract talented foreign workers to the country, Chancellor Olaf Scholz announced plans to reform Germany’s immigration system...

Technology

PARIS — Brussels wants media concentration to become a European Union issue. French billionaire Vincent Bolloré is testing how serious it is. The European...

Technology

Press play to listen to this article Voiced by artificial intelligence. Spain is proving the most troublesome country to probe in EU lawmakers’ ongoing...

Europe

KYIV — It’s all about the weapons — and we’ll do everything to get them to Kyiv.  That was the message from Nordic and...

Foreign Policy

BERLIN — The German government gave a piece of advice to China on Monday as the country faces historic protests against its rigid zero-COVID...

Europe

Ukraine’s main power operator Ukrenergo announced Monday that it has applied emergency shutdowns throughout the entire country due to a rapidly increasing power deficit....

Energy

EU countries resumed last-ditch talks on Monday to secure agreement on a price cap for Russian oil, with deep splits among them on where...

Industrial Policy

A planned reform of EU corporate taxation would substitute national business tax rules, EU Economy Commissioner Paolo Gentiloni said Monday. The “Business in Europe...