From October, a new gas levy in Germany will allow companies to pass a portion of their growing costs onto customers, to help stabilise the energy market. But following criticism that some companies might use the levy to boost their profits, Federal Economy and Climate Minister Robert Habeck has promised to change the draft law. 

Concerns that companies might use gas levy to boost profits

With the ongoing conflict in Ukraine and temporary shutdowns of the Nord Stream 1 gas pipeline fanning the flames of energy uncertainty in Europe, the government is moving to allow energy companies in Germany to pass some of their soaring costs onto customers via a gas levy (Gasumlage) - an emergency measure to prevent the market from imploding. 

However, the already disputed levy became even more controversial recently when it was revealed that some of the companies set to receive a share of it - including Axpo and Gunvor - are ones that have recorded huge revenues in 2022. This has sparked claims that, far from shoring up a struggling sector, the levy will simply line the pockets of big energy firms while families and households struggle to afford their utility bills. 

Speaking to ZDF at the weekend, Habeck vowed to amend the law to prevent energy firms from benefiting financially. “We will solve this problem,” he said, adding that it was not right that “companies are taking advantage of it.” 

Habeck’s coalition partners from the SPD and FDP are calling for the amendments to be made as soon as possible. Christian Dürr, parliamentary group leader for the FDP, told Bild that the levy should “in no way lead to extra profits for companies… We must be careful that government intervention does not make the energy crisis worse.” 

Describing the current plans as “unfair”, Ralf Stegner of the SPD told Bild that they give “the opportunity for extra profits to corporations that are not in need and have made millions in profits over the years.” He added, “It exacerbates social hardship for millions of consumers.” 

Government cuts VAT to compensate for rising gas prices

The surcharge has been set at 2,419 cents per kilowatt hour, the equivalent of around 483,80 euros per year for a four-person household with an average energy usage of 20.000-kilowatt hours. 

To compensate, the government has agreed to temporarily cut VAT on gas from 19 to 7 percent - although this is not enough to offset the rapidly rising cost of energy.