Energy Cable #46: Scholz to the rescue!
- German government coming to aid the industry
- Demand may very well push an inelastic market
- Global gas stock levels are very strong and consumption is weak (For now)
- The weather needs to play ball before we go long Nat Gas again..
After moaning like it’s the beginning of the 00’s German industry has once again been lent a helping hand from the government and this could have a huge potential impact on global energy markets. So let’s see what is up and down on the surface of the proposal.
First in order to help the very energy-intensive German industry the government has decided to decrease the taxes on electricity by a whopping 190% from almost 2 cents to 0.05 cents running into 2025. This will immediately help industries like metal and chemical and we are keen to see the Ifo activity survey numbers coming out of these sectors on the back of this proposal.
Additionally, around 350 firms that are especially competitive internationally are set to get help with a price guarantee of 6 cents per kilowatt. All the subsidization will total 12 billion EUR in the next year according to the German government and will be fully financed within the ‘Schwarze Null’ rules.
Chart 1.a: Lessons from Hartz 4 for the German industry. Moan enough and get help