Germany moves ahead with massive energy relief package

German officials have agreed on the main details of a plan to provide up to 200 billion euros ($198 billion) in subsidies to households and businesses to ease the strain of high gas, electricity and heating prices

Germany Cabinet (Copyright 2022 The Associated Press. All rights reserved)

German officials have agreed on the main details of a plan to provide up to 200 billion euros ($198 billion) in subsidies to households and businesses to ease the strain of high gas, electricity and heating prices.

Chancellor Olaf Scholz and the governors of Germany's 16 states agreed Wednesday on a two-stage plan to tackle high gas prices that largely mirrors the recommendations last month of an expert panel.

Some other European Union countries think the move by the 27-nation bloc’s biggest economy should have been coordinated with them and have expressed concern that it could push up prices elsewhere.

Scholz has repeatedly defended the plan, insisting that Germany is showing solidarity with the rest of Europe and its program is similar in scope to other countries’.

Scholz's Cabinet agreed that the state will take on the cost of gas customers’ monthly bill in December. That will be followed by a price subsidy for part of what households use starting in March and through April 2024. Officials aim to backdate the start to Feb. 1; state governors are still pressing the federal government to find a way to make it valid for January too.

For businesses, the so-called “gas price brake” is being introduced in January already.

In addition to that, an “electricity price brake” is to take effect on Jan. 1, capping the cost of part of what households and businesses use. It will be financed in part by using “windfall profits” that many electricity generators have run up as a result of high energy costs.

German officials say the plan, which will limit subsidies to a proportion of pre-crisis use, will still encourage people to save energy.

“One thing is clear -- (costs) won't quite go down to the level we had before the Russian war of aggression against Ukraine, but the increase won't be as enormous as what some people have received in the way of bills,” Scholz said.

Both houses of parliament have cleared the way for the government to borrow the money for the plan.