Germany's Coalition Collapse and Its Impact on Gas Policy

Germany's coalition collapse threatens to delay legislation waiving a gas storage levy for foreign buyers, raising tensions with European neighbors facing higher prices. This situation could force reliance on Russian gas. The legislation is crucial amid an upcoming snap election in February.

The recent collapse of Germany's governing coalition casts uncertainty over a draft law aimed at waiving a costly gas storage levy for foreign buyers, potentially straining relations with European neighbors grappling with rising energy costs.

As the cold weather spikes gas prices, European governments worry about supply security, especially with a Russian transit deal set to expire soon. Germany's increasing gas neutrality charge, mainly affecting trading volumes released from its vast storage capacities, is expected to drive up energy costs significantly in neighboring countries.

Political infighting has already delayed legislative proceedings, rendering the law's future dependent on parliamentary processes. Meanwhile, gas market players report complications and liquidity constraints, escalating the push toward cheaper Russian gas alternatives, to the concern of several European leaders.

(With inputs from agencies.)