In order to shield businesses and individuals from the effects of skyrocketing energy prices, German Chancellor Olaf Scholz proposed a 200 billion euro ($194 billion) ‘defensive shield’ that included a gas price brake and a reduction in the sales tax on the fuel.
The largest economy in Europe is struggling to keep up with rising gas and energy prices, which are mostly the result of a collapse in Russian gas supplies to Europe, which Moscow has blamed on Western sanctions following its invasion of Ukraine in February.
‘The administration will make every effort to bring prices down. To do this, we are erecting a sizable protective shield,’ Scholz added.
The government will enact an emergency price brake on gas under the plans, which are expected to last until the spring of 2024. The specifics will be revealed next month. It is abandoning a proposed gas tax designed to assist businesses facing high spot market costs.
A temporary price freeze on power will subsidise consumers’ essential needs as well as those of small and medium-sized businesses. Gasoline sales tax will decrease from 19% to 7%.
Germany is pushing the development of liquefied gas terminals and expanding renewable energy sources as part of its efforts to reduce its reliance on Russian energy.
Two nuclear plants that were previously scheduled to shut down by the end of this year will be able to continue operating until spring 2023. This will enable households and businesses, particularly in southern Germany, to weather any winter supply disruptions.
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