Averting 'Gasmageddon' and securing a just transition (22-9-1)/Allianz

The gas crisis threatens to morph into “Gasmageddon”

• The gas crisis threatens to morph into “Gasmageddon”: Energy poverty is an old scourge in the EU, even before today’s energy crisis began. The situation has worsened significantly this year as the invasion of Ukraine has caused gas prices to explode to levels not seen in well over a decade. A dual-pricing scheme could address the shortcomings of the counter-measures implemented so far.
• Exploding gas prices are aggravating an already dire situation: the number of households in energy poverty in the EU28 has increased by more than +50% until June 2022. But worse is still to come: Looming gas shortages could drive retail prices up by 200%, tripling the share of German households struggling to pay energy bills to 8.4% by the end of the year. Implemented counter-measures such as tax cuts and price caps have serious shortcomings, not least in curtailing incentives to save energy. A dual-pricing scheme could be a better approach. This would allow each household to buy a pre-defined quantity of energy to power its home at an administered price, while all further energy needs have to be bought at market price.
• Beyond this first layer of ad-hoc crisis measures, a new social contract is needed to mitigate the regressive impact of climate policy and to safeguard the green transformation. The best solution would be the introduction of a new benefit, a type of “energy money” but with a twist: the payment (full or smaller amounts) is made to a so-called “energy savings account”, i.e. the amounts are not consumed but (partially) saved; these savings are topped up by the state. In this way, two birds can be killed with one stone, resulting in behavioral changes to use less energy and the build-up of financial reserves by low-income households.

2022_09_01_Energy_Transition-복사.pdf

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