Germany allocates €200 billion to overcome the energy crisis

The government will introduce mechanisms for an emergency reduction in gas prices and containment of electricity prices

Chancellor of Germany Olaf Scholz announced a €200 billion ($194 billion) «defense shield» to protect businesses and households from increasing energy prices. Reuters informs about it.

Europe’s largest economy is struggling to cope with rapid energy costs, largely driven by the collapse in Russian gas supplies to Europe. According to Scholz, energy prices should fall and the state will do everything possible for this.

According to plans, by the spring of 2024, the government will introduce a mechanism for an emergency reduction in gas prices – details will be announced in October 2022. The previously planned gas fee will also be canceled to help companies in the face of high prices in the spot market.

A mechanism for controlling electricity prices will be introduced. The government will subsidize the basic consumption of households, small and medium enterprises.

Gas sales tax will fall from 19% to 7%. In an effort to reduce its dependence on Russian energy, Germany is also promoting the expansion of renewable energy and the development of liquefied gas terminals. Two nuclear power plants, which were planned to be closed by the end of this year, will operate until the spring of 2023.

Finance Minister Christian Lindner said Germany would finance the aid package with new loans. In 2022, Berlin suspended the new debt limit of GDP’s 0.35%.

The head of the Ministry of Finance noted that the country’s public finances are stable.

“We can put it no other way: we find ourselves in an energy war. We want to clearly separate crisis expenditure from our regular budget management, we want to send a very clear signal to the capital markets,” he said.

Industry groups welcomed the package. In particular, as CleanEnergyWire informs that, VW Stahl called the assistance package as an important step in the right direction. The main thing now is the speed and efficiency of actions to overcome the crisis and prevent serious damage to the industrial base.

As GMK Center reported earlier, the Italian government supported steel sector in the conditions of energy crisis. Tax discounts included in the decree «Aiuti ter» will allow reducing the impact of energy costs in energy-intensive industries.

Steel companies will be able to take advantage of a 40% tax discount at the end of 2022. It will be calculated considering each producer’s real energy consumption. According to source, the discount will not be given to companies that will not carry out production.

As GMK Center informed before, the European Steel Producers’ Association (EUROFER) again called on the EU to take urgent and more effective measures in the conditions of the energy crisis. Energy-intensive industries welcome the efforts made by member states to overcome the energy crisis. Therefore, measures should be more urgent and effective.