On Monday I called for a gas price cap at this point. Now the federal government has decided on just such an electricity and gas price cap. cause for joy? no way.
The decisions of the federal government underline once again that the politicians who want to lead our country through what is probably the worst crisis since the Second World War have not recognized the seriousness of the situation or do not want to recognize it.
At first glance, everything sounds as requested by many. The federal government is mobilizing 200 billion (our current or future tax money) to cushion the energy cost shock for private households and companies. Citizens have more in their pockets, companies no longer have to worry about their survival.
But as is so often the case, these are measures that combat the symptoms but do not address the causes of the crisis. What is my criticism:
1. The measure comes much too late: The Russian war of aggression began seven months ago. The first concepts for cushioning the consequences of the energy price shock were presented in June. It had to be October for the federal government to react, and apart from a promised spending volume of 200 billion, there is no concept of what criteria and how the funds will flow. Even if this is to be worked out by mid-October, as promised today, the measure should not take effect until January. Far too late for many households and businesses.
2. Help according to the watering can principle: As soon as it comes to relieving private households, we are always faced with the problem that not only the needy are relieved, but also those who can afford the higher energy prices. This makes the relief unnecessarily expensive. In addition, we don’t even have the database to determine a basic requirement, for example the gas bill does not show how many people live in a household. Direct payments to poorer households are the better instrument here – also with a view to the savings incentive.
dr Daniel Stelter (Twitter: @thinkBTO) is the founder of the discussion forum and podcast of the same name “Beyond the Obvious”, which specializes in strategy and macroeconomics, and is a management consultant. Previously, Stelter was with the Boston Consulting Group (BCG) from 1990 to 2013, most recently as Senior Partner, Managing Director and member of the BCG Executive Committee. His current book is “A dream of a country: Germany 2040”.
3. Energy price caps require an energy strategy: The aim of capping electricity and gas prices is not only to relieve consumers, but also to help the economy. But this help only makes sense if it serves to mitigate a temporary price shock. But that’s not exactly what we can assume. Contrary to my demand, the federal government is not doing anything significant that will lead to a significant drop in energy prices in the near future. There is no real extension of the lifetime of the nuclear power plants, no decision on fracking in Germany, but a unilateral adherence to expensive imports of liquid gas and the illusion of a future with renewable energies, which, however, requires considerable overcapacities and backups to function, which also means high costs holds. As long as the federal government does not decide to change strategy, our energy costs will remain high. However, we will not be able to afford permanent subsidies, which leads to the conclusion that the electricity and gas price cap only influences the point in time at which energy-intensive companies exit the market, but not the exit itself. Ultimately, the price cap is a very expensive attempt to distract from the failure of the actual task, namely the redefining of our country’s energy strategy.
Energy has never been as expensive as it is now. But instead of panicking, you should calmly check potential savings at home. As our guide shows, there are many of them.
4. Financing: 200 billion will be made available in a special pot, initially financed by new debt. But the government is creative: On the one hand, so-called “excess profits” in the electricity market are to be taxed, on the other hand, there are hopes for European taxation of coal, gas and oil companies. The latter actually urgently need to invest more in the development of new deposits and the expansion of refinery capacities. They need money to do this, especially because climate policy in recent years has made a decisive contribution to global investment in this sector having halved. The prices for fossil energies had therefore risen significantly even before the war. Coal, for example, costs a good eight times as much when loaded in Australia today as it did in 2019. The reason: far too little investment in mining and transport infrastructure.
The same applies to the electricity market. The only exception are the providers of renewable energies, to whom we, consumers and taxpayers, guarantee minimum profits. Here, like France and Great Britain, one should also define maximum profit limits and relieve us in times of high prices. Otherwise, what we said for oil, gas and coal also applies here: we need every incentive to invest. Special taxes are not an incentive. On the contrary.
It would be better to combine the need to expand supply with the financing of a subsidy necessary for the transition. According to estimates, fracking in Germany could replace Russian gas supplies for 40 years. If we decided today to develop these reserves and use them until the energy transition was successful, the cost of the cap could be financed by adding a surcharge to the gas price. Because gas from Germany would not only be much more climate-friendly than liquid gas from all over the world, but also unbeatably cheap.
Remains to be held. An energy price cap only makes sense if it goes hand in hand with a massive expansion of supply. Otherwise he’s just pointlessly burning billions trying to buy votes and keep businesses afloat. If the money is gone, the illusion bursts.
