Germany Agrees on Aid Package for Businesses and Consumers

BERLIN — Germany unveiled its third energy crisis relief package this year to protect consumers from rising prices over the winter, a day after Russia indefinitely suspended natural gas deliveries to Europe’s biggest economy.

The new measures – worth 65 billion euros, equivalent to $64.7 billion – were flagged before Russian gas giant Gazprom PJSC cut off deliveries through the Nord Stream gas pipeline. The package represents Berlin’s latest attempt to shield Germany from the fallout from Russia’s economic war on the West and rising inflation in general.

“Russia is no longer a reliable energy supplier,” German Chancellor Olaf Scholz said on Sunday as he unveiled the package.

The measures include a price cap on electricity. a cut in the value-added tax on natural gas; the deferral of carbon price hikes for a year; and one-off payments to pensioners and students aimed at offsetting some of their higher energy bills.

The package also includes tax changes to prevent income taxes from rising with inflation and government aid for energy-intensive industries, as well as a number of other, smaller measures targeting low-income earners, commuters, families and others.

To fund the measures, the government said it would implement an internationally agreed minimum rate of corporate tax, which it said would raise billions over the next few years, and seek a Europe-wide special tax on companies earning extremely high profits from the current volatility. in the energy markets.

Presenting the measures, Mr. Scholz called on citizens to save energy by limiting consumption.

The measures were announced a day after Russia indefinitely suspended gas deliveries to Germany via the Nord Stream pipeline.


Photo:

HANNIBAL HANSCHKE/REUTERS

The new package brings Germany’s energy and inflation relief for consumers and companies this year to a total of around 95 billion euros. Berlin had previously cut petrol taxes and funded a heavily subsidized public transport ticket from June to August, among other measures.

However, gas and electricity prices continued to rise as Russia increasingly cut off supplies to Europe under various technical pretexts. Western governments and independent experts say Moscow is trying to choke Europe’s economies to weaken Western voter support for Ukraine.

German businesses are scrambling to find alternatives, with some storing natural gas to run their factories, while others are turning to other energy sources such as coal, oil, propane and renewables.

Western leaders are bracing for the possibility that Russian gas flows through the key Nord Stream pipeline may never return to full levels. The WSJ’s Shelby Holliday explains what an energy crisis could look like in Europe and how it could ripple across the world. Illustration by David Fang

More than half of households in Germany use natural gas for heating and face sharp price increases later this year, also for electricity, the price of which is partly adjusted to the price of natural gas, even if it comes from other sources.

In June, Germany declared a state of emergency for the country’s energy supply, a preliminary step that could lead to natural gas restrictions if reserves fall too low in the winter months. The federal energy regulator said on Saturday that Germany’s natural gas reserves were 84.5% full – weeks ahead of schedule thanks to lower consumption – but warned that “companies and consumers must prepare for significantly higher natural gas prices gas”.

On Friday, Gazprom indefinitely suspended gas flows to Germany via the Nord Stream pipeline, hours after the Group of Seven said its members would impose a price cap on Russian crude.

Gazprom said it found a technical fault during pipeline maintenance – an explanation widely dismissed by experts as unlikely.

The pipeline was due to resume operations early Saturday after three days of maintenance. Before the maintenance, the pipeline was operating at 20% of its capacity.

Germany’s energy regulator said: “The defects claimed by the Russian side are not a technical reason for the stoppage of work.”

Siemens Energy AG

, which supplies turbines for Gazprom, said on Saturday that defects described by Gazprom had occurred in the past and had not led to interruptions in gas deliveries. He said Gazprom also had an ample supply of turbines it could use to power the pipeline.

“As a wind turbine manufacturer, we can only determine that the discovery of this is not a technical justification for the shutdown,” Siemens Energy said.

Write to William Boston at william.boston@wsj.com

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