The German government is under pressure to radically revise or scrap a controversial new gas levy on already stretched consumers after it emerged that some energy companies seeking a share of the surcharge have posted billion-euro earnings.
Robert Habeck, the economy minister, said his ministry acknowledged the angry response to the surcharge and would urgently review the aid package in an attempt to prevent gas importers whose businesses have profited from recent energy inflation from benefiting from it.
The conservative opposition CDU/CSU said on Friday it would be fighting to overturn the levy. As criticism of Habeck poured in from his coalition partners, the pro-business liberal FDP and the Social Democrats, there was even speculation that the controversy around the scheme could lead to the collapse of the government.
However, Habeck stressed a levy, due to be implemented in October, was necessary to ensure German energy security and to stop some companies, which have faced higher costs in acquiring energy from other sources after Russia’s squeeze on its deliveries of gas, from going bust.
Habeck admitted his policy was a “political problem”, adding it was “certainly not morally right that companies who, to put it bluntly, have earned shed loads of money, are able to say … due to the relative drop in our income we’re going to ask the population for help and we expect them to give us money.”
But he told Die Welt in a subsequent interview, in which he said he would be “taking a closer look” at the policy, he was concerned there may be no legal way around the levy if energy provision to Europe’s largest economy over the critical winter months was to be secured.
The revelation that of the 12 companies which had initially applied for about €34bn in assistance, according to Germany’s gas market manager, Trading Hub Europe, were some who have made billions of euros in profits due to energy inflation. One, which only had about a 1.5% dependency on Russian gas, has caused outrage across the political divide, including within Habeck’s party, the Greens.
Under the policy, from 1 October until the end of March 2024, German consumers would be expected to pay an extra 2.4¢ for every kilowatt hour of gas used. This would be on top of price hikes, with experts currently saying energy bills could increase by as much as seven times over the coming winter.
The chancellor, Olaf Scholz had previously argued that a drop in VAT on energy bills from 19% to 7% would ease the burden on households caused by soaring energy costs and would more than offset the additional costs brought about by the gas levy. He said earlier this month: “The question of justice is crucial if the country is to stick together in this crisis.”
Some experts agree to differ with Scholz’s calculation and argue it’s the principle of the levy which is its most damning characteristic: that even gas suppliers who are not in financial need are able to apply for help at a time when many ordinary Germans as well as businesses face a very tough period which is expected to extend into the spring of 2023.
The government has already introduced a swathe of measures worth billions of euros to alleviate rising living costs, and is expected to announce a new package of measures in the coming days.
It has faced criticism for repeatedly rejecting the idea of an additional tax on energy companies which have seen their profits soar since Russia’s invasion of Ukraine.
But Christian Lindner, finance minister and head of the FDP, said while in principle he believed the levy was acceptable he wanted to see corrections made to it.
“If there is a need to change something in order to make this instrument more targeted so that it can benefit consumers, then we will not shy away from making corrections,” he told German television.
Saskia Esken, joint leader of the SPD, said it was a “question of fairness”. It could not be accepted that companies which were not in economic difficulty should receive money from consumers, she said, calling the companies “freeloaders”.
A far left protest group has already said it is planning demonstrations against the gas levy, while far-right groups have said Germany faces a ‘Wutwinter’ – or angry winter of street protests with the government the main focus of their anger.
On the list of the companies which have applied for relief from the levy are two which have already received billions in state bailouts this summer. Uniper SE and Securing Energy for Europe GmbH, previously known as Gazprom Germania GmbH, are between them asking for 92% of the available funds.
The company RWE AG, which filed an application to receive aid, has said it will drop its claim as it is not heavily dependent on Russian gas. Habeck urged others to do the same.
Jens Spahn, head of the opposition CDU’s parliamentary faction, said he believed that the levy would lead to even higher gas prices.
Under the levy rules, he said, “the gas traders will get 90% of their costs back. That will encourage them to buy gas at any price, regardless of how high it is, knowing that the losses will be balanced out. That will make the gas price even more expensive than it needs to be.”
