Environmental groups reject German finance minister’s fuel price subsidy plan

Several NGOs have rejected a proposal by Germany’s finance minister Christian Lindner (FDP) to reduce the price for petrol that skyrocketed in the wake of Russia’s attack on Ukraine through a state subsidy. “A petrol price subsidy would be an expensive support tool that encourages greater use of fossil energy sources instead of saving energy,” the head of environmental group NABU, Jörg-Andreas Krüger, said. While the state should be supporting struggling customers financially, this should not thwart the general trend towards reducing fossil fuel use and supporting more environmentally friendly alternatives, he argued. “The most effective fuel price brake is efficient cars – or even better, those that do without oil altogether,” Krüger said, adding that FDP transport minister Volker Wissing only recently advocated against new car efficiency standards at the EU level. Alternatives would be cheaper public transport tickets, speed limits to reduce fuel consumption and support for buying bikes, e-bikes and cargo bikes, NABU said. Greenpeace finance expert Mauricio Vargas said that a fuel price rebate would be “highly problematic from both an economic and a social perspective.” It would distort incentives for saving fuel and disproportionately benefit high-income groups, who tend to possess more cars and drive longer distances than those with lower levels of income. A better solution would be to further increase the existing heating cost support for low-income households and a quick implementation of the “energy bonus” concept that would redistribute proceeds from carbon pricing, benefitting those with the smallest carbon footprint most. NGO BUND warned that Germany will likely miss its transport sector emission reduction targets once again this year, adding that these “factually have to be halved within the next eight years.” Now would be the time to “end the car-focused transport policy of the past decades,” BUND head Antje von Brook argued. “A fuel price rebate only treats the symptoms and temporarily lowers prices without being sustainable,” she said, adding that a speed limit would be needed “now more than ever.”

In an op-ed for business daily Handelsblatt, Thomas Sigmund backed the finance minister’s idea of supporting motorists directly through a rebate. “First of all, it’s finally a creative idea worth debating,” he said. Commuters, families and businesses require quick relief and 70 percent of the petrol price are already imposed by the state, Sigmund wrote. A rebate would be more targeted than a tax reduction, which fossil fuel companies might not pass on to consumers. It would be wrong to think that high petrol prices only hurt low-income households. “This affects many households and especially middle-class families,” he said. By contrast, Gerald Traufetter called the idea “populistic nonsense” in an op-ed for Der Spiegel. The current “dramatic” situation in Ukraine as well as the possible effects of energy poverty in Germany warrants a more comprehensive solution, he argued. Traufetter too said implementing the “energy bonus” concept would lead to better results.