By Andreas Kissler
BERLIN (Dow Jones) — The planned gas price brake should take effect for large companies from January 1, 2023, but according to the recommendation of the gas price commission, they must give a location guarantee. The committee proposed this in its final report, which the chairmen handed over to Chancellor Olaf Scholz (SPD), Economics Minister Robert Habeck (Greens) and Finance Minister Christian Lindner (FDP).
“The preservation of the location should be proven by a location and transformation agreement between collective bargaining or company parties (employer/works council) or in the supervisory board, which has parity co-determination,” said a press release distributed by the Ministry of Economic Affairs. If, in exceptional cases, such co-determination structures do not exist, companies would have to prove that at least 90 percent of the jobs would be retained for at least one year after the end of the support. “Otherwise they will have to pay back the support they received.”
After an agreement was reached on the gas price brake for large industrial consumers (around 25,000 companies) in the EU state aid assessment, there are also a number of technical adjustments compared to the original proposal of the Gas Commission. However, there will be neither an individual application procedure at company level nor changes to the Gas Commission’s proposal for the amount of the contingent that can be relieved (70 percent) and the procurement price (seven cents per kilowatt hour). However, companies would have to register their participation in the program with their supplier (opt-in) and make it public.
Emergency aid fund to cushion burdens
Because there are likely to be numerous consumers in both households and companies who would be overwhelmed by the “New Normal” of energy costs that are likely to be high, even in the medium term, the Gas Commission proposed “accompanying measures” for all consumers. From January 1, 2023 to April 30, 2024, there should be an emergency aid fund that should be aimed at households with lower and middle incomes who cannot bear the burden themselves, regardless of the type of energy source. The basis should be the income and the amount of energy costs.
Landlords who make advance payments for their tenants in the event of extreme price increases for gas and district heating should also receive interest-free liquidity support. There should also be an aid fund for social service providers such as hospitals or care facilities. The committee also recommended a termination moratorium: private households should be given at least six months to settle their energy debts. This help must be maintained until the housing benefit plus proposed by the federal government can be fully administered and citizens actually get their claims paid out.
According to the proposal, a hardship program should be launched for companies from January 1, 2023 until the end of the gas price brake, which could be designed on the basis of the loan programs from the coronavirus pandemic. “It is important to avoid giving gas consumers a more favorable position than consumers of other energy sources,” the statement said. The final report also focuses on measures to increase gas supply and reduce demand. Efforts to jointly procure gas in Europe and to make additional gas volumes available should be pushed forward consistently.
The expansion of renewables is to be accelerated considerably
In addition, all sensible measures should be taken to increase power generation capacities in Germany in the short term and at the same time reduce the need for gas-fired power generation. The focus should be on the expansion of renewable energies and this should be accelerated considerably. In order to achieve the national gas savings target of at least 20 percent, consumers should be better informed and more frequently about their gas and heating consumption.
According to the recommendation, financial bonuses (savings premiums) in the form of a fixed amount should create an additional incentive to achieve the savings target, especially in households whose heating costs are generally covered. The commission also recommended transformative steps that save gas in the short term. These included investments in energy efficiency and heating technologies, a change in energy sources and the renovation of buildings. Inefficient gas-heated apartment buildings as well as schools and hospitals should be prioritised. Funding options should be expanded and a strategy for using waste heat should be developed.
“The challenge is to relieve households and companies as specifically as possible while maintaining the incentives to save gas,” explained Monika Grimm, one of the three chairmen of the commission. This “in a very short time compared various proposals for relief to what is feasible” and presented recommendations. It was about “giving households and companies reliable, resilient guidance,” said the President of the Federation of German Industries (BDI), Siegfried Russwurm. “Now it’s the federal government’s turn.”
Contact the author: [email protected]
DJG/tank/sha
(END) Dow Jones Newswires
October 31, 2022 09:14 ET (13:14 GMT)