Gas consumption must be further reduced massively in the coming months. The most important instrument – as hard as this hits households and companies – is high gas prices. They show shortages and give comprehensive incentives for savings. Gas prices on wholesale markets are high, but are delayed in reaching consumers.
The political discussion about price caps creates further uncertainties and reduces the incentives to save in response to high prices or in anticipation of them. It is now important to initiate further well-coordinated measures and to communicate this to the population. The following 10 points would be advisable.
Coal phase-out, climate change, sector coupling: The briefing for the energy and climate sector. For decision makers
Price increases should be passed on to consumers (households and industry) according to a clear and transparent procedure. The necessity of this procedure must be clearly communicated. Hardships must be cushioned from the start.
Since many companies and households have so far been protected from rising prices, necessary price adjustments will in any case take place over a longer period of time and are politically difficult to implement in full, further positive incentive mechanisms for saving gas should be established in addition to the market mechanism. These pull the market incentives forward or strengthen them.
High premiums should be offered promptly for a particularly extensive reduction in gas consumption. Saving targets are to be based on historical consumption and evaluated afterwards. It is important to remember that an early announcement of bonus programs delivers higher savings, as investments and advance notice are often required.
An auction mechanism must be established that awards compensation for the reduction in gas consumption. In doing so, one must not only address temporary shortages. Funding must be linked to templates, such as a company’s energy saving plan. If a company’s waiver would trigger extensive cascading effects, there should be a process of elimination from the auction.
Gas generation continues to be at a high level. At the current prices, coal-fired power plants generate electricity more cheaply than gas-fired power plants, but cannot yet be used to their full extent on the electricity market. In addition to the gas crisis, the crisis on the electricity market and possible future bottlenecks must also be taken into account.
All available coal-fired power plants must be brought onto the market immediately so that the market mechanism can take effect in order to save additional gas volumes. Long-term operation or the extension of the lifetime of nuclear power plants can ease the situation, especially on the electricity market, especially in the medium term. This requires a more comprehensive cost-benefit analysis.
Gas storage facilities are an important element of energy sovereignty. However, the dynamics of storage have leveled off recently.
Higher feed-in quotas are correct. They are already increasing the scarcity and are already taking the supply situation in winter into account when using gas. Consider the resulting price increases in the relief.
The gas crisis can only be overcome at European level. Germany plays a special role in this. Russia is currently using its market power on the supply side to fuel uncertainty and fears through volume restrictions and to drive up prices. Russia’s income must be restricted. A European perspective opens up further options for action here.
The bargaining power on the demand side must be increased through central European gas purchasing. It should also cap the price paid for Russian gas and guard against threats of a Russian supply freeze.
The infrastructure expansion for electricity, gas and hydrogen must be advanced faster and at European level. In doing so, attention must be paid to synergies between gas and hydrogen networks, both in terms of unbundling and with regard to joint planning processes and new import routes. Hydrogen should also be purchased jointly, i.e. in a network of European countries, in order to be able to initiate and diversify more supply relationships.
Households and businesses will be severely affected by the consequences of rising energy prices over the next at least two to four years. Here, it is not only important to quickly bring further relief on the way, but also to look ahead to these medium-term challenges. To this end, the framework for targeted support must be created as quickly as possible. The digitization of the administration is one of the important tasks for this legislative period.
Hardships in households should be addressed by non-restrictive one-off payments to households that reach into the middle of society. If the payments are subject to income tax, lower income groups receive more. However, the unquestionable need for support of companies in the transformation must be kept as low as possible. Among other things, this will succeed if binding timelines are created for the availability of infrastructure (e.g. in the case of hydrogen networks), certification of climate-neutral energy sources and ambitious pricing of CO2 in all sectors. In the case of relief that is necessary in the medium term, the following applies: do not undermine market mechanisms.
The conditions must be created immediately to allow every citizen to receive targeted transfer payments. This infrastructure for direct payments will be needed in several contexts. Existing structures should be used as far as possible. The current draft of the tax law points in the right direction.
Not only market-based incentives help for energy security and resilience, but also non-price measures. These can also have a shorter-term effect and increase the incentives provided by high prices.
Information campaigns must be tailored to the addressee and provide useful, clearly understandable and actionable recommendations. Various actors should be involved. You can use letters or digital alternatives, for example, to provide information about expected price increases or concrete savings tips.
Timely feedback on current gas consumption is also desirable. Small investments should be supported, for example in digital thermostats, in order to control and optimize the heat demand relatively easily.