Germany to spend $196B to curb rising energy costs

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BERLIN – Germany’s chancellor outlined plans for a €200 billion ($196 billion) fund to shield households and businesses from rising energy bills on Thursday.

“The German government will do all in its ability to bring prices down,” Olaf Scholz declared at a news conference via video link.

He stated that the German government will abandon a previous intention to levy a gas tax on customers and instead implement a gas price cap to reduce rising costs.

Scholz noted that the restrictions will be in effect until March or April 2024, and that a board of experts will work on the details of the price ceiling.

The gas tax is no longer necessary, and the extra €200 billion in funds would help businesses, he said.

‘Putting a cap on gas prices should encourage people to save money on gas.’

According to Economy Minister Robert Habeck, the energy crisis is on the point of escalating into an economic and social crisis.

“Capturing gas prices should stimulate gas savings,” according to Habeck.

“We are in an energy war,” Finance Minister Christian Lindner said, referring to Russia’s gas supply interruption.

Germany will mobilize its economic force when necessary, and the actions outlined today should not contribute to the country’s inflation, according to Lindner.

Fund for Economic Stabilization

In the face of soaring electricity and gas costs, the prime ministers of Germany’s 16 federal states urged the government to adopt an energy price restriction on September 28.

Scholz, Habeck, and Lindner were negotiating the specifics of the gas price cap this week.

The gas price cap will be funded by the Economic Stabilization Fund, which was established without additional budgeting to aid businesses during the coronavirus disease 2019 (Covid-19) epidemic.

Scholz’s €200 billion fund announcement came after Germany’s inflation rose from 7.9 percent in August to 10 percent in September, a 71-year high.

The energy crisis

The decision by Moscow to halt gas delivery through the Nord Stream 1 gas pipeline has sparked a mounting energy crisis in Germany.

On September 19, the German government nationalized the energy business Uniper, in which Finland’s public corporation Fortum owns a majority part, in order to assure supply during Europe’s energy crisis.

Meanwhile, the German energy market regulator (Bundesnetzagentur-BNetzA) warned that with the fast temperature change last week, families and businesses used too much gas, and that this latest natural gas consumption is too high to be sustainable.

Source: Anadolu

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