German government agrees wide-ranging energy price relief for consumers

In view of skyrocketing energy costs, the German government has agreed on a wide-ranging plan to provide financial relief to consumers, including the elimination of the renewable energy levy – a move that will save electricity users 6.6 billion euros, newspaper Die Zeit reports. The 10-point plan, which still has to be approved by the parliament, also includes a higher commuter allowance and more support for recipients of welfare and unemployment benefits. In total, the relief plan’s measures add up to the double-digit billions, it said. Those measures also include projects that have already been implemented, such as heating cost subsidies and a minimum wage increase to 12 euros an hour.

Originally scheduled to be abolished next year, the renewables levy that consumers pay with their energy bill will now be eliminated on 1 July. Consumers will save about 3.7 cents per kilowatt-hour of electricity – more than 10 percent of the final price, Handelsblatt notes. In January, consumers in Germany had to over 20 percent more for energy than a year earlier. The price of heating oil and natural gas rose particularly sharply year-on-year, with respective increases of 52 percent and 32 percent, Handelsblatt said. In the wake of the Russian-Ukraine conflict, many experts expect further gas price rises, as Russia is Germany's main gas supplier.

The German Chemicals Industry Association (VCI) welcomed the move to end the renewables surcharge earlier but has stressed that more measures are necessary. "The abolition is right and important and a glimmer of hope for our medium-sized businesses in brutally challenging times,” said VCI head Wolfgang Große Entrup. Reductions in electricity prices and taxes are necessary for medium-sized companies to restart after the Covid-19 crisis, he added. “The goal must be an internationally competitive industrial electricity price.”