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ENERGY

German government ‘set to ditch controversial gas levy’

The gas levy - which would have cost the average family in Germany another €500 a year - likely won’t come into force after all, according to German media reports.

A woman holds euro bills next to a gas flame on a kitchen stove in Frankfurt (Oder).
A woman holds euro bills next to a gas flame on a kitchen stove in Frankfurt (Oder). Photo: picture alliance / dpa | Patrick Pleul

According to reports in the Frankfurter Allgemeine Zeitung (FAZ), Germany’s controversial Gasumlage – or gas levy – will get axed either Tuesday or Wednesday, with a Gaspreisdeckel, or a cap on the price of gas, set to replace it.

Energy and Economics Minister Robert Habeck of the Greens insisted once again just last week that the levy would go ahead.

It would see an additional 2.4 cents per kilowatt hour passed on to consumers, in order to stabilise Germany’s energy providers, which are also struggling with higher costs after Russia cut off cheap supplies.

German and Danish investigators are now investigating whether the Nord Stream II pipeline, which Berlin axed in February in the days leading up to Russia’s invasion of Ukraine, was deliberately sabotaged Monday, as it leaks gas into the sea.

With electricity prices having doubled and gas prices nearly quintupling, several politicians – also with the government’s own traffic light coalition – have called for the levy to be scrapped.

Lars Klingbeil, co-leader for Chancellor Olaf Scholz’s Social Democrats, told public broadcaster ZDF that the gas levy was on “politically shaky ground”.

“It must be clear that we have the strength to discuss this openly and correct ourselves if necessary,” he said.

“The gas levy makes gas prices more expensive, which raises the question of whether it makes sense economically,” said Finance Minister Christian Lindner, who leads the liberal Free Democrats (FDP).

FAZ reports that negotiations between the three governing parties and relevant energy companies were nearing an end Tuesday, with the Cabinet expected to make a final decision Wednesday morning.

A gas price cap is likely to replace plans for a gas levy, which would see a limit on what consumers would pay their energy companies for gas, leaving the federal government to pick up the bill for the difference when market prices go above the designated cap.

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

With the gas price cap already having the support of many Social Democrats and Greens, Lindner’s FDP is set to agree to it provided a few conditions are met.

“As the FDP, we can foresee a gas price brake coming into force,” Christian Dürr, who leads the FDP in the Bundestag, told Deutschlandfunk. “Now, frankly, I expect the Greens to move on the issue of extending the life of nuclear power plants and restarting coal-fired power plants.”

It’s not yet clear though how the government would pay for the cap. The FDP has been resistant to suspending Germany’s constitutionally enshrined debt brake, which limits what they can borrow.

The SPD and the Greens want to suspend it to pay for a gas price cap, which could cost the government between €30 and €50 billion according to one estimate.

The debt brake can be suspended in emergency situations, such as in March 2020, when the German government put it on ice to pay for the first Covid-19 rescue package.

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ENERGY

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.

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