Germany is looking to reduce energy bills for end consumers by scrapping a fee on natural gas that was introduced during the peak of the energy crisis in 2022.
The German government on Wednesday backed a bill to abolish the so-called gas storage levy, which was intended to cover the higher cost of gas supply after Russian deliveries via pipeline to Germany ended.
All consumers of gas, including households, have had to pay an additional levy, which goes to support Germany’s gas importing companies that were struggling with a lack of Russian gas and sky-high prices of non-Russian alternatives in 2022 and early 2023.
The levy, however, raised energy bills for households and businesses.
Back in 2022, Marcel Fratzscher, president of DIW, the German Institute for Economic Research, told Düsseldorf’s Rheinischen Post newspaper that German households should prepare for at least tripled costs of heating on gas. The levy should be accompanied by a relief package for lower-income households, otherwise the new charge could lead to a “social catastrophe,” Fratzscher added.
The German government is now ready to ditch the gas levy and estimates that the move would mean a total of $3.9 billion (3.4 billion euros) in savings on energy bills, or up to $70 per household per year.
Meanwhile, 70% of Germany’s gas storage capacity was booked by companies as early as at the beginning of July, giving Europe’s biggest economy more breathing room to fill storage sites ahead of the winter.
This year, the EU eased the rules and allowed more flexible targets for natural gas storage refills in the bloc in a move aimed at preventing price spikes.
The greater flexibility came in response to the fears of several large gas-consuming nations in Europe that they would have to either subsidize storage filling when it’s uneconomical or miss the targets.
By Tsvetana Paraskova for Oilprice.com
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