Germany to scrap gas levy over neighbours’ threats to boost Russian imports

Berlin has said it will abolish a controversial tax on gas piped through Germany to its neighbours, after countries such as the Czech Republic and Austria warned they could be forced to increase Russian imports.

Sven Giegold, the German secretary of state for economic affairs and climate action, said on Thursday that the government would abolish the levy at the start of 2025 after EU member states said it was costing them tens of millions of euros in additional fees.

“It was never our intention to hamper . . . the diversification away from Russian gas,” Giegold said. “Quite the contrary, the income from that levy financed mainly by German customers has contributed to filling gas storage facilities and by that way stabilising prices.”

The decision comes amid heated discussions over how EU member states will cut their remaining imports of Russian fossil fuels. The talks include potential sanctions on Russian supplies of shipborne liquefied natural gas, which have increased to compensate for the big drop in piped gas.

Following Moscow’s full-scale invasion of Ukraine in 2022 and its subsequent large cuts to pipeline exports to Europe, overall imports of Russian gas to the EU have dropped from more than 40 per cent of the total in 2021 to about 8 per cent today.

But Czech energy minister Jozef Síkela said the EU was still paying tens of billions of euros for imports of Russian oil and gas, and that imports of piped gas from Russia had increased 60 per cent since Berlin had introduced its transit tax. German infrastructure is central to flows of gas reaching eastern Europe from ports on the EU’s north and west coasts.

“I appreciate the declared decision of the German government to waive from next year the fee that favoured the import of gas from the east at the expense of gas from our western allies,” he said.

Leonore Gewessler, Austrian climate and energy minister, said she was pleased that the “intense negotiations” had yielded results.

“The German announcement . . . is important news for our energy security and for good European co-operation,” she said.

The German levy, imposed on gas crossing its borders, was introduced in October 2022 to cover the cost of refilling gas storage units to meet EU targets ensuring that the bloc would have enough gas to make it through the winter season.

Italy and the Netherlands were among countries that considered similar charges, according to officials involved.

Germany, the bloc’s largest consumer of gas, was criticised by its neighbours for a lack of solidarity as countries that were still heavily reliant on Russian gas struggled to diversify their supply.

The continuation of the levy, combined with the end of a transit agreement for Russian gas via Ukraine, would “significantly reduce the security of supply” of gas to central and eastern Europe, said a paper from Austria, Hungary, Czech Republic and Slovakia circulated among EU diplomats ahead of a meeting of energy ministers on Thursday.

Síkela added that the levy undermined an initiative launched by Prague and Berlin for EU-wide talks on how to eliminate the final phases of European dependency on Russian fossil fuels.

The European Commission had been weighing whether to initiate legal proceedings that would force Germany to end the tax after internal analysis showed that it contravened the EU’s single market rules, according to EU officials.

However, a decision by Germany to increase and extend the levy earlier this month “prolongs and deepens negative impacts . . . making it more difficult for member states in this region to access gas imports from western Europe”, the paper said.

The 34 per cent increase in the transit tax to €2.50 per megawatt hour would go ahead on July 1, Giegold said, as the legislation could no longer be changed. 

Additional reporting by Shotaro Tani in London

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