Gas price brake in Germany? Spain shows how it can be done better

The federal government is looking for a solution to dampen the prices for gas and electricity. Other EU countries have already taken action. An overview.

Many European countries have capped electricity or gas prices for months to protect their citizens from high energy costs. Now the federal government also wants to protect consumers and businesses in the energy crisis with its “double boom” worth up to 200 billion euros. However, other EU governments have criticized the fact that this gives Germany an advantage over other countries that have less financial resources. Chancellor Olaf Scholz (SPD) continues to reiterate that the package is appropriate given the size of the German economy and that other countries are doing something similar.

But: According to calculations by think tank Bruegel in Brussels, the federal government plans to spend up to 300 billion euros on emergency aid, including the “double boom”. This corresponds to about eight percent of Germany’s gross domestic product (GDP). In Spain, for example, the corresponding share is only 2.9 percent, in the Netherlands it is just under five percent. What are the other European countries doing? An overview.

  • Austria decided to throttle electricity prices in September. This means that households pay the same prices for about 80 percent of their consumption as before the energy crisis. Costs for the state: three to four billion euros. Further reductions in the electricity price for large families and poorer people were announced. In February, the cabinet had already decided on a one-off energy cost voucher of 150 euros for households with low and middle incomes. This measure will cost a total of about 600 million euros.
  • In France Electricity and gas prices have been capped for months. The price increase will also be limited to 15 percent next year. The state also provides financial support to low-income people. According to a spokeswoman for the Ministry of Economic Affairs, more than 100 billion euros will be earmarked for the reception at the end of 2023.
  • the The Netherlands relieve their citizens with a package of 23.5 to 40 billion euros. From January this will finance a price ceiling for part of the consumption of gas and electricity for households and small businesses. For November and December 2022, the state will also pay all households 190 euros each to alleviate the high bills. People with a very low income should receive an extra energy allowance of 1,300 euros. Previously, the VAT on energy was reduced from 21 to 9 percent.
  • In Ireland consumers will receive an electricity cost credit of 200 euros in November, January and March. People who are already entitled to heating subsidies receive more. The measures are part of an aid budget of eleven billion euros, which also subsidizes products such as period items or medicines. Furthermore, the package of measures provides for a maximum monthly energy subsidy of 10,000 euros for companies and the VAT on electricity and gas has been reduced to nine percent. Gasoline was discounted.
  • In Spain a gas price ceiling does not apply to end customers, but to gas in electricity production – this also dampens the electricity price. Regional rail transport is free until the end of 2022 and long-distance travel is cheaper. In addition, small pensions in particular were increased by 15 percent and it was decided to grant a special benefit of 200 euros for people with a low income. The value added tax on electricity and gas was reduced to five percent. In total, the deduction since September 2021 should amount to around 35 billion euros.
  • from Italy The outgoing cabinet under Prime Minister Mario Draghi has decided on several aid packages to relieve companies and consumers. Some 66 billion euros have now been scraped together for this. At the pump, the state pays about 30 cents per liter of petrol or diesel. The government of the EU’s third-largest economy has also lent businesses a helping hand with aid loans and reductions in VAT on fuel.
Italian Prime Minister Mario Draghi and French President Emmanuel Macron: Italy and France have already found solutions to rising energy costs. (Source: IMAGO/Gao Jing/imago-images-pictures)
  • In Slovenia households have been paying 15 to 60 percent less for electricity since September than before, thanks to a price brake. In May 2023, the VAT will be reduced from 22 to 9.5 percent for gas, electricity, district heating and firewood. This year also saw some one-off payments to poorer people and aid to endangered companies.
  • Croatia has introduced a price ceiling for electricity, the rates for heating costs have been frozen for this winter. Poorer people received a discount on their electricity and gas bills. The value added tax for gas and district heating has been reduced from 25 to 13 percent. In total, the shelter costs 3.4 billion euros.
  • In Hungary Since 2014, gas and electricity prices for household customers have been capped. Under pressure from world market prices, the government has now had to undo the regulations. Since August, households only pay the old fixed price up to an average consumption limit, and above that consumption is many times higher.
  • Czech Republic has passed a price ceiling for gas and electricity for households and small consumers. The government estimated the cost of the measure at the equivalent of up to 5.3 billion euros. Private households will also receive a subsidy of about 4,000 kroner (160 euros) this year. For example, large-scale industrial users can apply for subsidies. Cost point: approximately 1.2 billion euros.
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  • In Poland electricity prices for households in 2023 will be frozen at the level of 2022 up to a certain consumption limit. Since February, the government has also lowered the tax rate on petrol and diesel fuel from 23 to 8 percent and suspended VAT on gas. Since many people in Poland still heat with coal, a one-time coal subsidy of the equivalent of 625 euros per household has already been approved.
  • In Denmark households can pay part of their electricity and gas bills later, prices will initially be frozen at the level of the last quarter of 2021. Electricity sales in the first half of 2023 were reduced to the EU minimum sales. In addition, the child benefit will be temporarily increased by 660 crowns (almost 89 euros) in 2023.
  • In Lithuania the government plans to cover part of the electricity price for all households. The national budget for 2023, which has not yet been approved by parliament, has earmarked 812 million euros for this. The gas price for consumers may also not rise by more than 40 percent from 1 January. That should cost 56 million euros.
  • In Estonia households are supported with their electricity bill with a subsidy of up to 50 euros per month if the electricity price exceeds 80 euros per megawatt hour. Likewise, citizens are also supported with gas prices above this amount – but only for a certain volume of consumption.
  • In Latvia the rise in the price of energy resources is partly covered by the state budget. Subsidies are provided for households that use gas, electricity, central heating, firewood, wood pellets or briquettes for heating. Different groups such as seniors or people with disabilities receive additional benefits. EUR 442 million will be made available for this. A new electricity and gas price brake was added at the end of September, so that private households receive the first 100 kilowatt-hours of electricity at a fixed price. So it should be with gas.

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