'We have become poorer' Germany crippled by soaring energy crisis

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As the cost-of-living continues to increase across the globe due to post-pandemic demand and inflation, all countries are experiencing an energy crisis, but Germany has been crippled by it. The turbulence of the energy market means that both companies and consumers are struggling with increased heating, electricity, and fuel prices.

Leading German economists spoke to FOCUS Online about the next moves the politicians should and should not take and offer their advice on what could help the energy costs.

In September, Katja Hoyer wrote an article for Unheard and discussed why Germany has a much larger energy crisis than Britain.

Ms Hoyer blames Germany’s lack of options to reliably increase their production of energy stating: “At least Britain has the option to scale up its own production of energy in the long run if it can find the political will to do so.”

After the Fukushima accident, Germany came under pressure to end nuclear power production and was voted to end nuclear power stations in Germany by the end of this year.

This goal means that Germany is now powered by 50 percent renewable sources that are backed up by fossil fuels and nuclear energy.

Ms Hoyer commented: “The huge drawback is that Germany is much more vulnerable. 

“Renewables are weather dependent and can often put too little or too much electricity into the system.

“If coal and nuclear energy are phased out as planned, Germany will rely entirely on unreliable renewables and imports. 

“The latter will not in small part be supplied by Nord Stream 2.”

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Government economics advisor, Monika Schnitzer noted that the soaring energy prices are due to increased costs for gas and oil imports.

She said: “Since we have no influence on these prices and cannot do without imports in the short term, this means that we as a country have become poorer overall.”

The six leading German economists all offered up similar solutions that the government could employ to help the energy crisis.

They suggest short-term and long-term solutions such as: a one-time payment in the short term to aid low-income families, VAT and electric tax reduction, the expansion of renewable energies and the abolition of the EEG surcharge.

Michael Hüther, Director of the Cologne Institute for Economic Research stated: “One-off payments such as a heating cost subsidy for housing benefit recipients are well suited to mitigate hardship cases. 

“It is important to check the need according to transparent criteria – also with regard to cases of hardship of companies.”

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Mr Hüther commented on electricity tax stating that it “can be lowered to the European minimum level and provide an additional progressive relief that benefits low-income households disproportionately in relation to their income. It also increases the attractiveness of the increasingly climate-friendly energy source electricity”.

Veronika Grimm, the Government economic adviser, agreed saying that “it would contribute to a large extent to reducing bureaucracy and make sector coupling more attractive. The latter two aspects are essential in order to advance the energy transition”.

Ms Schnitzer discussed the expansion of renewable energies saying that they “should be promoted in order to become economically and politically less dependent on gas and oil imports in medium term”.

Claudia Kemfert, the Head of Energy, Transport and Environment Department at the German Institute for Economic Research noted that this was “the best solution in the fight against rising fossil energy prices”.

She added: “We must get away from fossil fuels as quickly as possible. 

“They are the main price drivers. Renewable energies have a price-lowering effect on the electricity exchange.”



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