Germany to pay December gas bills for households and businesses under new energy crisis plan

Germany to pay December gas bills for households and businesses under new energy crisis plan

Germany is due to pay most of the country’s gas bills in December as part of an effort to protect citizens and the economy from the energy crisis fueled by Russia’s war in Ukraine.

Berlin has annoyed its EU neighbors by allocating up to 200bn euros (£175.5bn) to a ‘defensive shield’ to ease the pressure, amid warnings in Berlin that the biggest Europe’s economy must reduce its gas consumption by 20% to avoid a possible shortage this winter.

Chancellor Olaf Scholz’s government announced on Monday that it would ‘work very quickly to implement’ a two-step plan recommended by a panel of experts who advised ministers to bear the cost of gas bills of December for households and small and medium-sized businesses.

That would be followed by a year-long “gas and heating price curb” that is expected to come into effect by March, said panel co-chair Veronika Grimm.

In a plan which the group says will still encourage people to use less gas this winter, households will pay 12 cents (11p) per kilowatt hour for the first 80% of the amount they used in 2021.

This “roughly matches the price level expected in the future”, Ms Grimm said, adding that the plan aims to introduce a “new normal” but to prevent price increases beyond that.

“It won’t be the case that the price will drop back down to seven cents in the future – we won’t be getting Russian gas for a long time.”

Last month, explosions ruptured Nord Stream pipelines built to deliver gas from Russia to Germany. However, Moscow and Berlin had already cut off supplies along both pipelines – President Vladimir Putin is said to have cut gas supplies to the bloc by 88% over the past year as prices soared.

Panel co-chairman Siegfried Russwurm, head of the Federation of German Industries, warned on Monday that rising gas prices posed an “existential” threat to a growing number of businesses.

“It’s not just about the fate of individual companies and their jobs, it’s about the strength and export successes of German industry, because they are the backbone of the German economy. “, did he declare.

Under their proposals – costing around 90bn euros (£79bn) – companies would have to pay 7 cents (6p) per kilowatt hour for 70% of their gas consumption in 2021, starting in January .

The panel, which included industry and union representatives, scientists and politicians, presented its findings to Mr. Scholz and the country’s economy and finance ministers on Monday.

Many European countries have offered similar subsidies on fossil fuels in the face of soaring prices. But some of Germany’s neighbors have criticized the huge sum Berlin is setting aside, arguing it will shut others out of the deal.

Mr Scholz argues the criticism is based on a misunderstanding of his government’s plans and claims Germany’s subsidy will prevent a gas shortage that could arise under a government-imposed price cap system. other countries. He also noted that it applies to a relatively long period.

His government said it would work very quickly to implement the panel’s proposals, but noted that verification of their compliance with European Union law will be necessary, and insisted that Berlin “will act in European solidarity”.

Russia began cutting gas supplies to Germany through the Nord Stream 1 pipeline in June and cut them off completely more than a month ago, before the explosions. The Nord Stream 2 gas pipeline was due to open this year, but Germany postponed granting an operating license after Mr Putin invaded Ukraine.

Before the supply disruptions, Germany received more than a third of its gas supplies from Russia and depended on Moscow for 55% of its supplies before the war in Ukraine.

Additional reports per AP

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