The recommendations from the International Energy Agency (IEA) regarding the need to reduce oil price pressure are reportedly receiving surprisingly positive reception within the Federal Ministry for Economic Affairs (BMWE). A document, obtained by the dts news agency and titled “Alternative Scenarios of Possible Overall Economic Impacts on the Euro Area and Germany” details various potential measures, presenting both arguments for and against each. The IEA’s “demand-side recommendations” are singled out as the most favorably received measures by the ministry’s civil servants.
The IEA has suggested several actions, including promoting more home office work, implementing stricter speed limits on highways, encouraging the use of public transport and car-sharing services, and even introducing “license plate rotation schemes” which would restrict private car use in major cities to specific days. Furthermore, the IEA suggested that reducing business flights could quickly alleviate pressure on the jet fuel market.
In its internal paper, which was last revised on Easter Saturday, the Ministry of Economic Affairs places the IEA proposals at the top of its list of recommended measures, offering several arguments in support. These include a “targeted relief effect for those in need” although the ministry acknowledges that such measures would require a “change in behavior”. Additionally, the proposals are noted as supporting the “strategy to move away from fossil imports” and, generally, having “few fiscal implications”.
However, according to the assessment provided by the Ministry of Economic Affairs, the IEA measures do carry a drawback: the primary argument against them is the potential “lack of acceptance among beneficiaries due to the infringement on privacy or habits”.
Among the many other commonly discussed measures, only two others receive a similarly positive assessment in terms of the balance between pros and cons. The European Union Emissions Trading System (EU-ETS) strongly supports expanding the Market Stability Reserve and ending the premature cancellation of certificates. From the Ministry’s perspective, there are virtually no counterarguments here; instead, the mechanism’s flexibility is increased, sending a clear signal to the market that more certificates will be released if necessary to lower prices-a move the Ministry expresses welcome for.
Finally, the BMWE reports a favorable cost-benefit ratio for increasing national gas reserves, for example, through fracking. Regarding these “unconventional deposits” the paper suggests that “substantial extraction is possible in the medium term” leading to a “substantially strengthened supply security” and, notably, “additional revenue for the states”. Conversely, the arguments against this measure cite that the ban on fracking would first need to be lifted, and the measure itself would likely only be effective “in the medium term”.