Germany’s Scholz wants energy market reform in place ‘this winter’

German Chancellor Olaf Scholz said Tuesday he wanted to hurry through reforms to the energy market to ease steep rises in the price of electricity ahead of the coming European winter.

German Chancellor Olaf Scholz speaks at the German Employers' Day, organized by the Confederation of German Employers' Associations (BDA).
German Chancellor Olaf Scholz speaks at the German Employers' Day, organized by the Confederation of German Employers' Associations (BDA). Photo: picture alliance/dpa | Bernd von Jutrczenka

Russia has dwindled supplies of gas to Europe following the invasion of Ukraine, sending the price for the fuel soaring and dragging up the cost of electricity in its wake.

Non-gas electricity companies, such as nuclear, solar or renewable firms, had been able to “make extra profits because the price is determined by the electricity produced with gas”, Scholz said in a speech in Berlin.

Germany and the European Union have developed proposals to cream off windfall profits from non-gas producers to ease the pressure on consumers and companies sinking under the weight of soaring bills.

“We will now push this through with great speed so that we can relieve the burden,” Scholz said.

 “You can be sure that this will happen at the speed necessary to get it under control this winter,” Scholz said.

Germany has raced to fill up its gas storage tanks ahead of the energy-intensive season and rushed to build gas terminals to import new
supplies from elsewhere.

Europe’s biggest economy has also restarted mothballed coal power plants, and earlier this month decided to keep two nuclear plants on stand-by through mid-April instead of completely ending the usage of atomic energy by the end of the year.

The government has also unveiled a €65 billion plan to ease the pressure of energy-price inflation, including cash for pensioners and

READ ALSO: Who benefits most from Germany’s inflation relief package?

But warnings are mounting Germany is heading for a recession, with influential think-tank the Ifo institute predicting Monday the economy will shrink by 0.3 percent next year.

Economy Minister Robert Habeck said a downturn could be prevented if energy prices were brought down, although it would be “hard” and “demanding”.

“We can of course work against it. And if we now seriously discuss economic aid, energy price brakes and the correct political measures, then of course we can avert it,” he said.

The sharp increase in the cost of electricity was the “biggest challenge” for Germany’s flagship auto industry, the VDA industry association said Tuesday.

Around 95 percent of companies surveyed by the VDA said they were heavily or very heavily burdened by rising prices, making Germany “uncompetitive”, in the opinion of the lobby group.

READ ALSO: What’s in Germany’s support package for rising energy bills

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Norway and Germany seek Nato-led cooperation for key undersea structures

Germany and Norway want to start a NATO-led alliance to protect critical underwater infrastructure, their leaders said on Wednesday, weeks after explosions hit two key gas pipelines in the fallout from the war in Ukraine.

Norway and Germany seek Nato-led cooperation for key undersea structures

 “We are in the process of asking the NATO Secretary General to set up a coordination office for the protection of underwater infrastructure,” German Chancellor Olaf Scholz told a press conference in Berlin.

“We take the protection of our critical infrastructure very seriously and nobody should believe that attacks will remain without consequences,” he said.

Norwegian Prime Minister Jonas Gahr Store said the alliance would be “an informal initiative to exchange between civilian and also military actors” with NATO providing “a centre, a coordination point”.

Underwater cables and pipelines were “arteries of the modern economy” and it was necessary to create “a coordinated joint effort to ensure security for this infrastructure”, he said.

Scholz said he and Store would propose the plan to NATO Secretary General Jens Stoltenberg, who is due in Berlin for a security conference. The Nord Stream 1 and 2 gas pipelines off the Danish island of Bornholm were targeted by two huge explosions at the end of September.

The pipelines, which connect Russia to Germany, had been at the centre of geopolitical tensions as Moscow cut gas supplies to Europe in suspected
retaliation to Western sanctions over the invasion of Ukraine.

Although they were not in operation when the leaks occurred, they both still contained gas which spewed up through the water and into the atmosphere.

Russia and Western countries, particularly the United States, have traded bitter barbs over who is responsible for the blasts.

Several European countries have since taken steps to increase security around critical infrastructure. 

The G7 interior ministers warned earlier this month at a meeting in Germany that the Nord Stream explosions had highlighted “the need to better protect our critical infrastructure”.

Norway has become Europe’s main gas supplier in the wake of the war in Ukraine, taking the place of Russia.

The Scandinavian country has a vast network of pipelines, stretching for almost 9,000 kilometres, linking it to the continent, which experts have said are at risk of sabotage.