Economists Favor Continued Operation of Nuclear Power Plants, Energy Funds in Germany
The continued operation of Germany’s remaining nuclear power plants and aid payments to low-income households are proposals that are particularly popular among the 178 participants in the ifo and FAZ Economists Panel. “Germany has to expand its supply of electricity and reduce demand,” says ifo researcher Niklas Potrafke. “Demand won’t drop as a result of the price cap on energy. Rather, policymakers need to maintain the incentive effect of high prices, and households and businesses in need of help should receive targeted payments.”
To expand the supply of electricity and gas in Germany, 81 percent of panel participants support the continued operation of the country’s three nuclear power plants beyond 2022. Other measures the economists like include pruning regulations that impede the expansion of renewables (74 percent), building more liquefied natural gas terminals at ports (71 percent), and expanding electricity transmission grids (70 percent) (see Figure 1).
At 83 percent, a large majority of participants are in favor of providing households with further relief from high energy costs, in particular for those in need. There is also broad agreement on what that relief for households should look like: only 14 percent of the participants in support of this measure are in favor of electricity and gas price caps. In contrast, 68 percent prefer payments in the form of energy funds (see Figure 2).
A majority (54 percent) of the panel is also in favor of providing businesses with further relief from high energy costs. However, there is significantly less support for business relief compared to household relief – it is 29 percentage points lower.
Economists are divided on the issue of imposing an excess profits or windfall tax on generators of renewable, nuclear, and coal power: 46 percent support such a tax while 43 percent oppose it.
Finally, 94 percent of participants expect Germany to slide into a recession as a result of the energy price crisis.
Survey
Energy Price Crisis: Only 14 Percent of Economists Support an Electricity and Gas Price Cap to Relieve Households
Accompanying its war of aggression on Ukraine, Russia has successively reduced gas supplies to Europe. As a result of Germany’s strong dependence on Russian gas, the supply freeze has led to a drastic shortage and price explosion on the energy market, burdening households and businesses alike.
