Germany to eliminate gas storage fee amidst Eastern EU concerns over Russian gas dependency
In a significant policy shift, Germany has announced the removal of the gas storage fee introduced during the 2022 energy crisis. This decision comes after Eastern EU member states raised alarms that the increased cost of imports from Western Europe was perpetuating their reliance on Russian gas.
The fee was initially implemented in October 2022, following the escalation of Russia’s invasion of Ukraine. As Moscow weaponized its gas supplies, on which the EU and particularly Germany were heavily dependent, Berlin introduced the storage levy to help offset the costs of stockpiling gas from alternative suppliers. This measure was crucial as wholesale gas prices soared ahead of the winter season.
Sven Giegold, a state secretary at Germany’s Federal Ministry for Economy and Climate Action, clarified that the levy was never intended to hinder the diversification away from Russian gas. Speaking at an energy summit in Brussels, Giegold emphasized that the income generated from the levy, primarily financed by German customers, played a key role in filling gas storage facilities, thereby stabilizing prices and markets. He announced that the levy, which was initially set to expire last month, would no longer be charged from January 2025.
Ahead of the Brussels meeting, Austria, Czechia, Hungary, and Slovakia reiterated their concerns about the storage fee. They argued that it increased costs for gas traders and consumers in their regions. These countries warned that the levy, combined with the scheduled end of Russian gas transit via Ukraine by the end of the year, would significantly reduce the security of supply for the entire Central and Eastern Europe (CEE) region, making it more vulnerable to price fluctuations.
EU’s perspective on energy solidarity
Energy Commissioner Kadri Simson had previously warned that export restrictions or cross-border levies could jeopardize EU solidarity. The EU executive hinted at potential legal action, citing possible infringements of European single-market rules. The Czech Industry and Trade Minister, Jozef Síkela, highlighted that the volume of Russian gas flowing into Czechia had increased since September as wholesale prices dropped towards pre-war levels, exacerbating the impact of Germany’s levy.
Despite their disputes over the storage levy, Germany and Czechia united before the summit to advocate for the EU to establish a “high-level working group.” This group would aim to accelerate the complete decoupling from Russia’s energy market. Síkela, discussing the proposal on social media, emphasized the need for a coordinated approach in limiting imports of gas, oil, and nuclear fuel from Russia.
The current State of gas supply
While the ongoing conflict in Ukraine has severely impacted the region, gas supplies have remained largely unaffected by the EU’s incremental sanctions. Gas continues to flow through Ukraine under existing contracts between Russia’s Gazprom and the EU, though this agreement is set to expire in December. Energy Commissioner Simson has indicated that there is no intention to renew this contract.
Supply shortfalls caused by Moscow’s reduced deliveries and the unexplained destruction of the Nord Stream pipeline to Germany have been largely mitigated. Increased deliveries from Norway and liquefied natural gas (LNG) from the US and other sources, along with an extended voluntary demand reduction policy, have helped stabilize the situation.