The International Energy Agency’s (IEA) recommendations for easing oil price pressure are being received surprisingly well within the Federal Ministry for Economic Affairs (BMWK). According to a paper obtained by the dpa news agency, titled “Alternative Scenarios of Potential Macroeconomic Impact on the Euro Area and Germany” ministry officials weighed several potential measures, detailing both arguments for and against each. In this assessment, the IEA’s “demand-side recommendations” stand out as the most favorably viewed.
The IEA has previously proposed measures such as increased work-from-home arrangements, stricter speed limits on highways, and greater promotion of public transport or car-sharing initiatives, including “license plate rotation schemes” that would restrict private car usage in major cities to only certain days. Additionally, the agency suggested that reducing business flights could quickly alleviate pressure on the jet fuel market.
In its internal document, which was last updated on Easter Saturday, the Ministry of Economy lists the IEA’s proposals in the top spot, citing several positive arguments. These include the potential for a “targeted relief effect for those in need” although this would require a “behavioral change”. Furthermore, the ministry supports the “strategy to phase out fossil fuel imports” and in most cases, there would be “little fiscal impact”.
However, the BMWK paper also points out a drawback to the IEA measures: the concern regarding “acceptance among beneficiaries due to encroachment on privacy/habits” is noted as the sole counter-argument.
Among the many other publicly discussed options, only two others are considered to have a similar positive reception in terms of balancing pros and cons. First, regarding the European Union Emissions Trading System (EU-ETS), there is general support for expanding the market stability reserve and abandoning the early retirement of certificates. From the ministry’s standpoint, this measure has no opposing arguments; instead, it aims to enhance the mechanism’s flexibility and signal to the market that more certificates can be released during shortages to lower prices, a move described as something to be “welcomed”.
Lastly, the Ministry of Economy also favors increasing domestic gas reserves through methods like fracking. The paper suggests that these “unconventional deposits” could enable “substantial medium-term production” leading to a “substantial strengthening of supply security” and additionally generating “greater revenue for the Länder” (federal states). The only drawbacks mentioned are that a fracking ban would need to be lifted and that the measure would likely only yield results “in the medium term”.
