How are additional costs for oil and gas distributed between private households, and how can politics ensure social compensation? The intensive research work on this topic by the Berlin-based climate research institute MCC (Mercator Research Institute on Global Commons and Climate Change) has now led to an advisory mandate from the German government in the context of the current energy price crisis. It has appointed Matthias Kalkuhl, head of the MCC working group Economic Growth and Human Development and professor at the University of Potsdam, to an Expert Commission on Gas and Heat, which was established at short notice. The background is Russia's war of aggression against Ukraine, the loss of natural gas supplies to Europe, and the resulting exorbitant price increase.
According to Federal Chancellor Olaf Scholz, the new advisory body with expertise from politics, business and science is to work out a concept “before the end of October” on how both private households and businesses can be relieved, given the high price of gas. According to Scholz, this also involves “the issue of pricing”. A key question is whether the relief will be provided via a subsidised low price for a certain basic consumption (“gas price cap”) or via targeted lump-sum payments. In a much noted study with group leader Kalkuhl as lead author, MCC recently highlighted: such a cap exacerbates the supply crisis because it reduces the incentive to save energy. The study recommends targeted transfer payments instead and calculates that for the poorer households in particular, these can largely compensate for the additional burden.
Further information:
- Federal government communication on the energy crisis and on the new commission:
https://www.bundesregierung.de/breg-en/news/measures-against-inflation-2126710 - MCC study of 29 August 2022 on gas prices and relief measures:
https://www.mcc-berlin.net/en/news/information/information-detail/article/how-to-secure-social-peace-now-despite-gas-shortages.html - Further MCC studies on the current energy crisis:
http://www.mcc-berlin.net/en/policy-dialogue/energy-crisis.html
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