BERLIN (AP) — German officials have agreed on key details of a plan to provide up to 200 billion euros ($198 billion) in subsidies to households and businesses to ease the strain high gas, electricity and heating prices.
Chancellor Olaf Scholz and the governors of Germany’s 16 states agreed on Wednesday to a two-step plan to tackle high gasoline prices that largely mirrors recommendations last month from a group of experts.
Some other countries in the European Union believe the move by the biggest economy in the 27-nation bloc should have been coordinated with them and have expressed concern that it could drive up prices elsewhere.
Scholz has repeatedly defended the plan, insisting that Germany shows solidarity with the rest of Europe and that its program is similar in scope to other countries.
Scholz’s cabinet has agreed that the state will pick up the cost of gas customers’ monthly bills in December. This will be followed by a price subsidy for some of what households use from March until April 2024. Officials aim to backdate the start to February 1; state governors are still pressing the federal government to find a way to make it valid for January as well.
For businesses, the so-called “gas price brake” is already being introduced in January.
On top of that, an “electricity price brake” is due to come into effect on January 1, capping the cost of some of what households and businesses use. It will be funded in part by the use of “windfall profits” that many power generators have accrued due to high energy costs.
German officials say the plan, which will limit subsidies to a proportion of pre-crisis use, will still encourage people to save energy.
“One thing is clear – (the costs) will not come down quite to the level we had before the war of Russian aggression against Ukraine, but the increase will not be as huge as what some people received under form of invoices,” Scholz said.
Both houses of parliament paved the way for the government to borrow money from the plan.