A government-appointed expert panel in Germany has recommended the implementation of a two-stage cap on energy prices. The move comes as the country aims to address concerns over a potential gas shortage in winter and strike a balance between saving energy and ensuring competitiveness.
The panel, including economist Grimm, emphasized the need to save 20% of gas to avoid a shortage during the winter season. The proposed scheme aims to achieve this delicate balance by maintaining incentives for energy conservation while curbing gas prices to support competitiveness, combat recession, and secure production sites in Germany, as acknowledged by Russwurm, the chief of the BDI industry association.
According to the scheme, the German government would cover consumer gas bills for the month of December. Subsequently, from March 2023 to April 2024, private households would be required to pay €0.12 per kilowatt-hour (KWh) for the first 80% of their gas usage from the previous year. On the other hand, the industrial sector would pay €0.07 per KWh from January 2023 to April 2024 for the first 70% of their gas usage from the previous year.
These measures are estimated to cost the German state around €91 billion, with approximately €66 billion allocated to supporting consumers, including small and medium-sized enterprises (SMEs), and €25 billion allocated to supporting the industry sector.
