Germany mulls cost-sharing scheme amid Russian gas cut fears – POLITICO


BERLIN — The German government plans to propose an emergency law for a vote in parliament next week that would allow it to distribute rising gas costs fairly between customers and businesses and rescue struggling energy company Uniper.

The proposal to introduce a special tax on the price of gas comes amid growing warnings that Russia could use a planned routine maintenance of the Nord Stream 1 gas pipeline on July 11, which usually involves a brief halt in deliveries, as a pretext to cut off the gas supply to Germany and Europe for a longer period.

Such a scenario would put Germany, which gets around a third of its gas imports from Russia, in serious economic trouble and allow Moscow to punish Berlin for its support of Ukraine and Western sanctions against Russia.

The chairman of Germany’s Federal Network Agency, Klaus Müller, warned on Saturday that the maintenance of the pipeline risked becoming “a longer political interview”. His remarks echoed the remarks of the Minister of Economy and Climate, Robert Habeck, who warned Thursday that a “complete blockade” of Russian gas was possible.

Gas supplies from Moscow have already been falling for weeks, raising fears that Germany could plunge into a recession later this year.

Habeck’s economy ministry is drafting new regulations that would allow the government to fairly distribute rising gas costs via a tax, officials said. Only some importers, such as Dusseldorf-based Uniper, are heavily dependent on Russian gas and are now facing steep cost increases as they have to compensate for reduced deliveries with expensive last-minute purchases on the global market.

The envisioned system would seek to balance these rising prices by making all private customers and companies pay more through the levy, whether their gas comes from Russia or from other suppliers like Norway.

Until now, consumer protection laws prohibit importers from passing on most of the increase in gas prices to end consumers. But the scheme means Uniper, Germany’s largest gas importer, is saddled with higher costs and now faces extreme financial distress or even bankruptcy. The idea is that the German government could use the revenue from the tax to help Uniper or other energy companies facing financial difficulties due to reduced gas supplies from Russia.

The tax could refinance rescue measures such as state aid or even direct government involvement for energy companies such as Uniper, which may soon be needed.

“I can confirm that the German government is in talks with Uniper about stabilization measures,” an economy ministry spokesperson said, while declining to comment on further details.

German Chancellor Olaf Scholz said on Thursday that Germany “is used to dealing with companies that go into crisis due to external shocks – as was the case with the COVID-19 pandemic, for example – and that so we have the will to do what is necessary.”

The Ministry of Economy is still working on the details of the tax over the weekend, as a corresponding regulation is expected to be presented next week to allow a vote before the summer holidays.

The skepticism comes from the Liberal Democratic Party (FDP), one of three parties in Scholz’s traffic light coalition alongside the Social Democrats and the Greens.

“The legal framework for levying a surcharge on the gas price needs to be thoroughly discussed. The traffic light coalition should not afford to handle such severe market price intervention with a quick fix,” said FDP energy policy spokesman Michael Kruse.

Parliamentary approval of such a regulation would not necessarily mean immediate application of the levy, but it would give the government the flexibility to activate it whenever it deems necessary.

“If we create the legal basis, high conditions must apply to the activation [of the levy]“, said Kruse.

Germany was already using a similar tax until recently to spread the costs of the transition to renewable energy between customers and companies.

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