Germany will seek to protect its citizens from soaring energy prices by introducing a third relief package valued at about EUR 65 billion (USD 64.96bn) with a windfall tax on power producers that make excess profits in the current situation.
The government unveiled the plan on Sunday, with Chancellor Olaf Scholz stating that a revenue cap will be set for those companies in the electricity market that do not have to pay high gas prices, such as producers of wind, solar, biomass and coal power or nuclear energy, and consequently generate "random profits".
Scholz said further that the many billions of excess profits will be redistributed to help relieve the burden on households and businesses, and ultimately make it so higher prices gradually disappear.
The announcement was made a couple of days after Russian state-run energy giant Gazprom said it would not be restarting gas deliveries to Germany via the Nord Stream 1 pipeline until certain “operational defects in the equipment are eliminated.”
Being the third such relief package unveiled by the state since Russia’s invasion of Ukraine, it takes the total financial support to around EUR 95 billion, according to the chancellor. The latest plan also includes one-off payments to pensioners and an extension to a public transport subsidy.
Germany’s Renewable Energy Federation (BEE) criticised the move by the government, reiterating that interventions in the electricity market or in financing mechanisms for renewable energies could lead to undesirable developments and significant distortions.
(EUR 1 = USD 0.999)
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