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ENERGY

German government ‘fears millions of heating systems could fail in winter’

If gas becomes scarce in winter, the German government is concerned it could start a chain reaction that would cause millions of household heaters to stop working, German media reported on Friday.

Digital thermostats
A digital thermostat shows freezing temperatures. Photo: picture alliance/dpa | Jens Büttner

Germany has been looking ahead to winter with concern amid fears of energy shortages and potential rationing, but according to a report in Bild newspaper, a reduction in the gas supply could have other unintended consequences.

If gas supplies become scarce, the government fears that the low pressure in the pipelines could cause millions of household heating systems to malfunction.

The concerns were raised in a confidential meeting between the head of the Federal Chancellor’s Office, Wolfgang Schmidt (SPD), and the heads of the state chancelleries on Wednesday, according to Bild. 

In the event that heating systems do fail, there could also be delays in getting them up and running again.

This is because professional expertise would be required for the heating systems to be reconnected to the gas supply, which could mean households are left in the cold until they can find an engineer. 

To avoid this happening, the government has demanded that utilities companies give at least 24 hours’ notice in the event of supply issues. This would prompt the Federal Network Agency to step in and take control of the gas distribution.

Frosty reception for gas levy

With Russia reducing its gas supplies into Germany in recent weeks, energy suppliers such as Uniper have been forced to make up the shortfall by purchasing gas elsewhere at short notice.

The ongoing supply issues have contributed to soaring prices on the energy market, with wholesale gas prices now five times higher than they were a year ago.

On Thursday, the cabinet voted through plans to introduce a levy on gas products that would allow struggling companies to pass their additional costs onto consumers.

However, the introduction of the levy – which could see families’ gas bills go up by around €1,000 per year – has sparked a debate about whether VAT should continued to be charged on energy products during the crisis.

READ ALSO: What is Germany’s new gas ‘tax’ and who will pay it?

Jens Spahn, the deputy leader of the CDU/CSU parliamentary group, criticised the levy for having “technical flaws” and being “unfair” on consumers.

“It is almost cynical that the state is still earning money from the special levy via VAT,” Spahn said. “Citizens are paying up to €100 more than they need to.”

With VAT calculated as a percentage of gas bills, any additional charges, such as the levy, will have the effect of raising the amount of tax households have to pay.

Critics of the plans say this goes against the principle of offering relief from high energy costs and will place an unnecessary burden on households.

Jens Spahn (CDU/CSU) delivers a speech in the Bundestag

Jens Spahn (CDU/CSU) delivers a speech in the Bundestag. Photo: picture alliance/dpa | Britta Pedersen

Currently, the FDP-led Finance Ministry is said to be looking at ways to ensure that the state doesn’t earn additional income through VAT on the back of the levy. 

“This is non-negotiable,” Economics Minister Robert Habeck (Greens) said on Thursday. 

So far, the government hasn’t determined how high the gas levy will be, though Habeck has predicted that it will be somewhere between 1.5 and 5 cents per kilowatt hour of energy.

The government is hoping to set the amount in stone by August 15th with a view to introducing the levy on October 1st.

As The Local reported on Thursday, there may also be legal issues that need to be resolved before the new charge can come into force. 

Current contract law stipulates that only the state, rather than private enterprises, can add a new levy to fixed-price contracts. 

This could cause difficulties since the government had intended for gas suppliers to apply the levy directly in order to compensate for up to 90 percent of their additional costs. 

READ ALSO: Germany’s gas surcharge plans face legal hurdle

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ENERGY

German Chancellor Scholz wants gas pipeline linking south and central Europe

Chancellor Olaf Scholz said Thursday he was seeking to shore up interest among European partners for a gas pipeline funnelling energy from southern to central Europe, as Germany scrambles to wind down Russian energy.

German Chancellor Scholz wants gas pipeline linking south and central Europe

“I have been very active in talks with my two colleagues in Spain and Portugal, but also the French president and the president of the European Commission in advocating that we should take on such a project,” he said.

A pipeline running through Portugal, Spain and France to central Europe is “conspicuously absent”, the chancellor told journalists.

If it existed, it would “now make a massive contribution to relieving and easing the supply situation”.

Energy exporter Russia’s invasion of Ukraine has upended the power market, sending prices soaring and countries scrambling for supplies.

Germany has been looking across the world to make up for an energy shortfall after Russia curtailed exports to the European economic giant, which has been heavily reliant on Russian gas.

Energy bills for German households are expected to double in the next months, while industry has also warned earnings would be hit by the power crunch.

Scholz did not give further details on the pipeline he was eyeing.

READ ALSO: Germany’s Scholz pledges more relief for lowest earners

A project called Midcat to link Portugal, Spain and France was launched in 2013, but it drew opposition from environmental groups and work was halted in 2019 when financing fell through.

In the wake of the Ukraine conflict, European Commission chief Ursula von der Leyen has called for the resumption of the project, saying it carries geopolitical importance.

The Spanish government is also favourable about resurrecting the pipeline project.

However, it is not keen to contribute to the estimated €440 million in financing needed as the project would not directly benefit Spain.

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