In an op-ed, the Professor of Energy policy explains the Gas Commission’s proposal for a price brake on gas.
On Monday, 31.10.2022, the Gas Commission set up by the Federal Government of Germany presented its final report in Berlin. At the core of the report is a proposed gas cost brake (the “Gaspreisbremse”, in German) that would financially relieve individuals and industry. In an op-ed in the Frankfurter Allgemeine Zeitung, Professor of Energy Policy Lion Hirth and colleagues explain that this must be carefully constructed to ensure that incentives to reduce consumption remain intact. This balancing act is a question of precise planning.
The authors highlight the point that subsidising gas prices would be an ineffective measure given the current circumstances in the gas market. Price subsides would increase demand for gas and remove incentives for consumers to save energy, worsening the crisis. Additionally, increased demand could create a price spiral between European partners in a competition to satisfy the market.
The gas cost brake, which should not be confused with a price cap, would ensure coverage of basic usage without subsidizing gas, thus providing relief to consumers while still preserving the incentive to save energy.
Read the full article in the FAZ to find out more. [in German]
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Lion Hirth, Professor of Energy Policy