The recent confirmation that the German government plans on abolishing the gas storage levy from 2026 onward has drawn mixed reactions from industry associations.
German energy innovators association BNE and energy intensive industry association VIK published statements on the abolition of the gas storage levy on Thursday and Friday, respectively. Berlin had promised to abolish the gas storage levy in late March, which was put in place to recoup the cost of filling gas storage sites in 2022 by market area manager THE. And on 30 July the German cabinet approved the draft federal budget for 2026. Finance minister Lars Klingbeil confirmed he plans to pay the outstanding balance of THE's gas storage levy account with funds from the KTF.
The government will allocate €21.7bn from the 2026 budget to the KTF, which will fund the levy's removal. This will require a change to the definition of the KTF, which was initially established in 2010 to support reaching climate goals. The storage levy was set at €2.99/MWh for the first half of this year and €2.89/MWh for the second half.
VIK approved of the abolition of the storage levy, and added that energy intensive companies will receive "significant relief" from the reduced gas costs. The association also said the decision will strengthen Germany's competitiveness as a business location. The storage levy — which increases energy costs for consumers — has led to German industries being outpaced by European counterparts and has resulted in "production cuts and relocations", VIK said.
German industrial output has been declining since April, after experiencing a short-lived recovery at the beginning of the year, because of US tariffs and macroeconomic uncertainty. The German economy and energy ministry said in mid-July that expectations of increased US tariffs from August onwards will further deter global trade and industrial production during the third quarter. Industrial gas demand in Germany in in line with this trend. Argus estimates industrial gas demand increased to 1.27 TWh/d in the first quarter from 1.23 TWh/d a year earlier. But gas use in industry fell to 869 GWh/d in the second quarter from 921 GWh/d a year earlier. And industrial gas use averaged 775 GWh/d on July, down from 798 GWh/d a year earlier.
VIK proposed the storage levy be abolished for large industrial consumers on 1 October, at the earliest. VIK also said companies should be given the option of a refund for the levy amounts that were already paid this year — "retroactively reducing the levy to zero". The association also expressed concern on the possibility of the reintroduction of the levy in 2027, which is included in the draft legislation.
But not all associations were welcoming of the plan. BNE approved of the government's efforts to increase efficiency in the energy markets, but disapproves of the use of KFT funds to finance the abolition of the gas storage levy. The association said using the KFT to pay for the levy "creates the wrong incentives" as the government is reducing the price of fossil fuels through subsidies. And at the same time electricity is "not exempted from […] the electricity tax".
The association said this contradicts the federal government's climate policy objectives. And it represents a "one-sided cost reduction" without any pivot toward eventual electrification, BNE said.
Klingbeil said in a press conference on 30 July he is "building on the policies that Robert Habeck shaped as minister of economy". He added "the real goal is renewable energies", and investment in gas will be a stepping stone toward "getting away" from coal.
