The German government plans to change the definition of the climate and transformation fund (KTF) in order to use it to finance the abolition of the gas storage levy, according to a planning document seen by Argus.
Instead of just allowing KTF funds to be used to provide relief for power prices, the government plans to explicitly allow gas price relief as well, according to a document outlining plans for the bill accompanying the 2025 planned budget. The law change would be necessary for the fund to be used to finance the abolition of the gas storage levy, the government said.
The coalition had previously promised to abolish the gas storage levy — set at €2.99/MWh for the first half of this year and €2.89/MWh for the second — to help industry and households with uncompetitively high gas prices, under its coalition agreement in April. In the draft bill, the government states that the gas storage levy account will "receive a subsidy from KTF funds in 2025 to relieve the burden on gas consumers".
German gas market area manager THE's gas storage levy account was still in a €4.2bn ($4.8bn) deficit at the end of May, according to the latest preliminary published balances. The levy was introduced in 2022 to cover the losses that THE incurred that year when filling German storage sites. The levy is currently charged on all domestic exit points, excluding to storage sites. Any potential future intervention in the filling of storage sites would be charged to this account and could then be refinanced in a similar way, although the German government has recently made clear that it is not planning to intervene this summer, even if legal targets for individual sites are missed.
The KTF was established in 2010 to allow for expenditure that "supports reaching the goal of the Climate Protection Act" and supports measures "suitable for advancing Germany's transformation into a sustainable and climate-neutral economy", according to the current KTF Act. The funds recently received a €100bn boost from new debt as the Green party only agreed to €500bn of special funds for infrastructure investment and aid to Ukraine if some of the infrastructure investment would be bound to climate targets.
But the funds in the KTF of around €33bn/yr are already about €24.1bn/yr too little to cover current climate finance needs in a way that leverages private investment and provides relief to households, according to a study published this week by energy think-tank Agora Energiewende.
