Economy

Germany to switch to energy shield in early 2023

Intervention in market mechanisms is not really in the DNA of German politics, even with a social democrat in the chancellery. Olaf Scholz showed this in his long opposition, since abandoned, to a gas price cap for the European Union. It has also done so domestically by pushing back for a long time the principle of tariff shields adopted in France, Italy or Spain.

Electricity, less generous than the French shield

At the end of the summer, under pressure from households strangled by bills and companies reducing their production, the three-party coalition, with the Greens and the Liberals, began to fall into line. First with the idea of ​​an “electricity shield”, deemed easier to set up, self-financed by European taxation of the superprofits of energy companies.

According to the measures adopted on Wednesday 2 November, after a final consultation with the Länder, the ceiling will be set at 40 centimes/kWh for households and SMEs. According to the Check24 portal, the current average price is 48 cents/kWh.

In order to encourage energy savings, a constant of the Berlin strategy, it will only be applied to 80% of the reference consumption. Beyond this quota, the market price will apply. The shield will come into force in January and will expire at the end of April 2024. The measure is less generous than the French shield. EDF’s regulated blue tariff will remain half the price despite the increase planned for early 2023.

Gas, a level comparable to France

Germany heating little with electricity, unlike France, the gas-heat shield, finally launched by Berlin, takes on greater importance. It is set at 12 cents/kWh for gas – a level comparable to France – and 9.5 cents/kWh for heat (urban heating, etc.), again on 80% of reference consumption.

The measure is due to come into force only in March, which has earned the government a shower of criticism. To make it wait, the State will pay the equivalent of a monthly installment in December. Olaf Scholz is committed to ” try “ to advance the system to February 1.

Large consumers favored

Large industrial consumers, a group of approximately 25,000 customers, will not have to wait. Their shield, at 7 centimes/kWh excluding tax, will be activated on 1 January. It will concern 70% of consumption in 2021. The ad hoc committee behind the setting recommended that companies make commitments on maintaining employment in Germany, to be negotiated between the social partners. In companies without such structures, she suggested a retention of 90% of jobs one year after the benefit of the shield.

The main buyer of gas across the Rhine, the German chemical industry breathes a half-sigh of relief. The ceiling will allow ” maintain “ activities in operation, according to an employer source reporting a reduction in production of 12% compared to 2021. Not sure, however, that production at a standstill, such as that of ammonia, can resume everywhere.

Aid criticized in Europe

The “gas-heat component” has been calculated at 96 billion euros, including 25 billion for industry, for 2023 and 2024. That is half of the envelope, controversial for its largesse among Berlin partners, of 200 billion put on the table by Olaf Scholz. It must also finance additional measures such as the extension of the housing allowance to 1.4 million additional households or a fund to help companies in difficulty despite the shield.

Given the European context and Germany’s past dependence on Russian gas, the ad hoc committee urged the Chancellor to “ strive to provide a concerted response with its neighbours”. The implementation of all the measures must be validated on November 18 by the Council of Ministers.

Source : WORLD NEWS

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