Germany sets out 2-stage energy subsidy package

Berlin, Oct 10: A pool of experts appointed by the German government proposed on Monday a two-stage mechanism of help for gas customers to ease the strain of high energy prices this winter.

The proposals from representatives of industry, trade unionists, scientists and lawmakers come as Russia's war in Ukraine drives prices upward.

What's included in the plan?

According to the plan, there would be a single payment of the equivalent of a monthly bill to gas customers in December.

That would be followed by a brake on gas and heating prices — by far the costliest part of the package.

Large industrial firms would pay a set rate, €0.07 ($0.068) per kilowatt hour, for the first 70% of their gas bill for 16 months as of January.

Private consumers, including domestic users and small and medium-sized firms, would pay a higher tariff of €0.12 per kilowatt hour for the first 80% for 14 months from March.

Above that usage, the customer would have to pay at market rates.

The total cost of the package would be some €200 billion (195 billion).

Panel co-chair Veronika Grimm said the plan aims to introduce a "new normal'' beyond which consumers would be protected.

Grimm argued that the plan would incentivize people to save gas because people who do so would want to avoid paying higher prices beyond the cap level.

Plan upsets Germany's neighbors

Several other European countries have proposed similar subsidies on the price of fossil fuels — for which prices had soared worldwide — over the winter.

However, some of Germany's neighbors have criticized Berlin's plan, arguing that it creates an unfair advantage for German businesses.

French President Emmanuel Macron says the measures have created "tensions" among countries who can't finance such a big package at national level.

Chancellor Olaf Scholz has defended the package, citing the potentially devastating blow of energy shortages this winter.

Source: DW