Germany’s gas levy development

As Russian gas flows have been systematically reduced, German buyers holding Russian contracts have had no choice but to purchase from the open market to ensure commitments to consumers are met. However, this has come at an enormous price as spot gas prices remain at record highs, placing many German buyers into financial difficulty. In response, the German government has stepped in with significant emergency funding to alleviate the cost of additional gas procurement. The German government must ascertain who will ultimately burden this emergency support and how. In the latest development, Germany has announced a gas levy that aims to cover the additional cost of purchasing spot market gas volumes. The gas levy will come into effect on 1 October 2022. Read this insight for the following: • What are the mechanisms of the gas levy, and who will pay? • Who is eligible for compensation from the gas levy? • What is the implication of the gas levy for the markets and domestic consumers?