The collapse of Germany’s governing coalition risks delaying the passage of a bill to exempt foreign buyers from a costly tax on gas storage from next year and increasing tensions with European neighbors facing higher prices.
Security of supply is already worrying European governments, as cold weather has pushed gas prices to their highest level in almost 13 months, and a Russian transit deal to supply gas to Europe via the Ukraine expires at the end of the year.
Gas neutrality fees in Germany, which storage operator Trading Hub Europe (THE) receives for collecting and releasing volumes from German caverns, the largest in Europe, will increase by 20% from January, THE said last month.
That could add 7% to energy costs in countries such as Austria and the Czech Republic, according to Reuters calculations based on current gas prices.
With an annual gas import bill of billions of euros, Austria estimated it has paid more than 50 million euros ($53 million) in the German tax since 2022.
Parliamentary sources from different parties in Germany’s coalition, which collapsed in November, said infighting led to the November timetable for the bill being scrapped and that the main opposition party will not support urgent bills ahead of a vote of confidence by Chancellor Olaf Scholz in mid-December.
Asked about the status of the legislation on Wednesday, a spokesperson for Berlin’s economy ministry said it depended on the parliamentary process. However, time is running out before the snap elections in February.
In gas markets, traders said the impact had already been to make transactions more difficult, reduce trading revenues and push some customers to seek Russian gas.
“Our members have reported negative effects on liquidity and price spreads on the futures markets in Germany,” said Doug Wood, chairman of the gas committee of the Energy Traders Europe association. The group represents 170 member companies.
RUSSIAN RISK
If Germany, owner of 23 billion cubic meters of storage capacity, were to renege on its legal obligations, traders say buyers would be forced to continue relying on Russian supplies that Europe is trying to avoid.
Czech Prime Minister Petr Fiala said he was unhappy with the use of Russian gas but that the cost was a concern.
“The fact that, momentarily, traders are using cheaper gas from Russia is a reality, and I am not satisfied with it,” he said on the X platform.
Flows entering the country from Slovakia, via Russia and Ukraine, accounted for more than 90% of supplies in November and fourth quarter totals to date stand at 77%, up from 38% in the third quarter , according to data from Czech gas pipeline network operator Net4Gas.
Austria sought to pressure Germany to quickly adopt the required amendment.
“Europe is competing globally. We cannot afford such national regulations,” Alfred Stern, CEO of the Austrian company OMV, told the German newspaper Sueddeutsche Zeitung on November 27.
Germany agreed to legislate the waiver after Austria, Hungary, Slovakia and the Czech Republic successfully complained to the European Commission earlier this year, saying they should not pay for THE costs.
THE, appointed by the government to bridge parts of Germany’s gas cavern infrastructure during the 2022 energy crisis, excluded border transition points, or virtual exchange centers, when calculating the new fee, assuming the law would pass.
A European Commission spokesperson said Brussels shared concerns that the current fee disrupts the internal market and makes diversification away from Russia more difficult.
“We urge Germany to ensure that the law abolishing the cross-border element of the storage fee is put in place as soon as possible,” the spokesperson said.
THE said its procedure was to not issue invoices for January sales until the end of March.
It is possible that the legislation will have been finalized by then. Failing that, German media and parliamentary sources have also indicated that the conservative CDU party, which is expected to win the February elections, could accelerate the passage of the bill once it is in power.
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