Germany to stop gas storage levy on transit from 2025

The German government has agreed to stop charging its gas storage levy on natural gas exiting the German grid at border interconnection points from 2025, permanent secretary in the German economy and climate ministry Sven Giegold said this morning.

The government intends to submit a law to parliament to change its gas storage levy so that it is no longer charged on gas transiting the country, in order to support stronger integration between European energy markets, Giegold said ahead of an energy council meeting in Brussels this morning. It had "never been Germany's intention to inhibit the integration between markets with this levy" or to disturb countries' efforts to gain independence from Russia, he said. Germany continued to support European gas supply diversification, for example through expanding its LNG import infrastructure, also in the interest of its neighbours, Giegold said.

The German government had introduced the levy to recoup the cost of purchasing 50TWh of gas on the spot market without hedging it forward in summer 2022 to fill storage sites ahead of the winter. But falling prices meant that market area manager THE could only recover about a third of the amount spent through gas sales, leaving a loss of about €6.3bn ($6.8bn) to be levied on all gas exiting the German grid.

The gas storage neutrality charge will continue to exist for domestic consumers as the "public good will continue to require financing", but Giegold said he did not want to pre-empt the legislative process with any details of future levy-setting methodologies. The recently-announced hike of the levy to €2.50/MWh for the second half of this year remains a legal requirement under the law currently in force. A change from the start of 2025 is an exceptionally quick turnaround in democratic legislation, Giegold said.

Germany's central and eastern European neighbours — especially Austria, the Czech Republic, Hungary and Slovakia — had previously pointed out large negative impacts of the levy for their diversification efforts away from Russian gas, and had asked the commission to act against the levy. Energy commissioner Kadri Simson, who had previously criticised the levy for "putting energy solidarity at risk", said this morning that she had sent several letters to German economy and climate minister Robert Habeck on the matter and expected Germany to abolish the levy on transit flows.

By Till Stehr