Germany mulls cost-sharing system amid fears of Russian gas cutoff

BERLIN — The German government is considering bringing an emergency law for a vote in parliament next week that would allow it to equally distribute rising gas costs between customers and companies and to rescue ailing energy company Uniper.

The proposal for introducing a special gas-price levy comes amid increasing warnings that Russia might use a planned routine maintenance of the Nord Stream 1 gas pipeline on July 11, which usually implies a short halt of deliveries, as a pretext to cut off gas supplies to Germany and Europe for a longer period.

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

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

Gas deliveries 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 currently drafting a new regulation that would allow the government to equally distribute rising gas costs via a levy, officials say. Only certain importers, like Düsseldorf-based Uniper, depend strongly on Russian gas and now face a sharp increase in costs as they need to compensate for reduced deliveries with expensive last-minute purchases on the global market.

The envisaged system would seek to balance out these increasing prices by making all private costumers and companies pay more via the levy, irrespective of whether their gas comes from Russia or other suppliers like Norway.

So far, consumer-protection laws forbid importers to pass on most of their increased gas prices to end-consumers. But this system means that Uniper, Germany’s biggest gas importer, is stuck with the higher costs and now risks extreme financial distress or even bankruptcy. The idea is that the German government could use the revenues from the levy to help Uniper or other energy companies that face financial hardship due to Russia’s reduced gas deliveries.

The levy could re-finance rescue measures like state aid or even a direct government involvement for energy companies such as Uniper, which might be necessary soon.

“I can confirm that the German government is in talks with Uniper about stabilization measures,” said a spokesperson for the Economy Ministry, while refusing to comment on further details.

German Chancellor Olaf Scholz said Thursday that Germany “has practice in dealing with companies that get into crises due to external shocks — as was the case with the COVID-19 pandemic, for example — and that we therefore have the willingness to do what is necessary.”

The Economy Ministry is still working out details of the levy over the weekend, as a corresponding regulation would have to be presented next week in order to enable a vote before the summer recess.

Skepticism is coming from the liberal Free 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 must be thoroughly discussed. The traffic-light coalition should not allow itself to handle such a serious intervention in market prices with a quick fix,” said Michael Kruse, the FDP’s energy policy spokesperson.

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

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

Germany already used a similar levy until recently to distribute the costs of transitioning toward renewable energies among customers and companies. 

Germany mulls cost-sharing system amid fears of Russian gas cutoff

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