27 Nov 2023, 13:36
Carolina Kyllmann

German finance minister announces end to energy price caps, causing disapproval among coalition partners

Deutschlandfunk / Tagesspiegel / Clean Energy Wire

Germany's finance minister Christian Lindner has announced that price subsidies for electricity and gas introduced during the energy crisis would not extend beyond the end of this year, following a damning court ruling declaring parts of the federal government’s budget planning unconstitutional. The energy price brakes, capping the price for a large part of household and businesses' electricity and gas consumption, would no longer be extended until March 2024 but instead run out at the end of 2023, the Free Democrat (FDP) told broadcaster Deutschlandfunk in an interview. The economic and stabilisation fund, which funded the energy price brakes, would be closed on 31 December and no more payments were going to be made from it, Lindner said.

Leading members of government coalition party Social Democrats (SPD) criticised the announcement to prematurely end the price brakes. SPD head Lars Klingbeil told newspaper Tagesspiegel there should be an alternative, and the party's deputy chairwoman, Verena Hubertz, spoke in favour of continuing the measure. Green Party parliamentary group leader Britta Hasselmann said the question of financing would still need to be clarified as part of further budget discussions, yet party head Omid Nouripour backed an earlier end to the price caps.

Germany's parliament agreed on 16 November to extend the electricity and gas price brakes, which were originally set to run out at the end of the year, until March 2024 as a "precautionary measure" to cushion energy prices until the end of the winter heating season. However, the premature end would "only have a minor price effect for most households," according to price comparison website Verivox. "The removal of the price brakes is easy for most consumers to get over," Verivox head Daniel Puschmann said. Gas prices for consumers on average are expected to increase by 1.1 percent due to the price brakes' abolition, Verivox said.

The government faces difficult decisions over how to plug a 60-billion-euro gap in its special fund for climate and transformation. This follows a constitutional court ruling which declared that the coalition's plan to use funds initially dedicated to respond to the coronavirus pandemic to fill Germany’s long-term Climate and Transformation Fund was unconstitutional. The cabinet is meeting today (27 November) to decide on a supplementary budget for 2023.

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