The German government plans to abolish the storage levy and "introduce suitable instruments to ensure secure and more cost-effective filling of gas storage facilities", according to a leaked document from the coalition negotiations.
The coalition parties plan to abolish the gas storage levy "for all" to lower energy prices for consumers in households and industry. The parties put a large focus on lowering gas and power prices through reducing the electricity tax to the EU minimum, capping power grid fees, and a capped industry power price for energy-intensive industries "otherwise not reached by relief mechanisms".
The government plans to introduce "suitable instruments", which would ensure gas storage filling to safeguard security of supply in a "more cost-effective" way. The gas storage levy of €2.99/MWh was introduced in 2022 to cover the losses that market area manager THE incurred that year when filling German storage sites. The levy is currently charged on all domestic consumers taking gas out of the grid. And according to German law, if THE has to intervene again to fill storage, the cost would be included in future levy calculations.
The parties propose financing the remaining €4.7bn in the storage neutrality account from the federal budget, but point out that the budgetary impact of this decision depends on timing, as levy payments continue to bring down the account's negative balance. But the payment could also be spread out over several years, the document says.
The paper was compiled by the working group on climate and energy, which submitted it on 24 March. Negotiations of the final coalition agreement are still ongoing. The conservative CDU/CSU and social-democratic SPD announced in early March that they would formally start coalition negotiations, after the CDU won the elections in late February. The parties outlined some planned adjustment to energy policy on 8 March.
Gas-fired capacity plans do not include hydrogen necessity
The coalition agrees to put forward "technology-open" tenders for up to 20GW of new gas-fired capacities "as fast as possible".
The new plants should be located "preferentially at existing power plant locations" and operational by 2030 and would be "controlled locally as needed". But like in the earlier draft, the parties seem to have dropped the outgoing government's requirement that at least some of the plants should be hydrogen-ready. The parties plan a "technology-open and market-based capacity mechanism" to ensure a system-beneficial technology mix, including power stations, storage and flexibilities.
And the government plans to use "free capacities" of existing industrial combined heat and power (CHP) plants more strongly, as a higher power supply would stabilise prices. The parties reiterated the proposal to use plants in the grid reserve to stabilise power prices.
No apparent unity on heating laws
While many sections of the document show large unity between the parties, negotiations do not seem to have found much common ground on the heat transition.
The CDU had campaigned with the promise to roll back the outgoing government's heating laws. The buildings energy act (GEG), which entered force in January 2024, mandates that new buildings install heating systems using at least 65pc renewable energy from January 2024 and tasks municipalities to draw up local heat transition plans.
The paper continues to list the abolition of the law as the CDU's position, planning to draft a new law focusing on a "long-term view on emissions efficiency". But the party wants to continue to subsidise new heating systems and harmonise energy efficiency classes with neighbouring countries, while pushing for later compliance deadlines with EU regulations.
The SPD would instead amend the GEG to make existing rules "more open to different technologies, more flexible and simpler" and combine them with "reliable, unbureaucratic, efficient and socially tiered subsidies". The centre-left party plans to make CO2-emissions avoidance the main control variable of the heat transition and expand subsidy schemes for a socially acceptable transition.
While the CDU plans to anchor a commitment to keep gas distribution grids operational in the coalition agreement, the SPD plans to phrase this as "gas grids necessary for a secure heat supply will not be decommissioned". But both parties agree on subsidies for district heating grids and the need for a regulatory overhaul of current rules.
German heat pump association BWP and environmental group DUH lamented reports that there had been an agreement to scrap the GEG in its entirety from the final coalition agreement. The built environment sector has repeatedly missed climate goals, both associations pointed out, highlighting the need for further government action to support transition measures in the sector.
