In view of the ongoing war in the Ukraine, the Association of Hessian Entrepreneurs' Associations (VhU) and the Hessian Chambers of Industry and Commerce are calling for massive state aid and tax cuts in the billions.

At the same time, the umbrella organization of the economy spoke out against a complete embargo on Russian energy supplies, but also in favor of accelerating the expansion of renewable energies in order to reduce dependence on Russian gas and oil.

Falk Heunemann

Business editor in the Rhein-Main-Zeitung.

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Specifically, the federal government should halve the taxes on petrol, diesel, natural gas and heating oil by the end of the year, explained VhU President Wolf Mang the demands of the association.

In addition, carbon dioxide emission rights should be priced at zero euros this year instead of around 53 euros per tonne of carbon dioxide, as was the case recently.

The national emissions trading system is actually intended to promote the switch from fossil fuels to renewable energies, and its billions in revenue flow into climate protection projects.

Lower gas prices by 40 cents

"Of course," said Mang, "the Hessian economy supports the economic sanctions" that were imposed on Russia because of the attack on Ukraine.

"The effects of the sanctions are manageable," he was confident.

"I'm more worried about energy prices." If they continue to rise, they could further reduce willingness to invest and lead to an economic downturn.

"Politicians should consider how the economic consequences of rising energy costs can remain manageable," said Frank Aletter, Managing Director of the Hessian Chamber of Commerce and Industry (HIHK).

Production with such high energy costs is hardly economically viable.

"In the manufacturing industry, affordable gas and electricity are an elixir of life," said Aletter, 31 percent of the energy used by industry is natural gas

According to the calculations of VhU and HIHK, the tax cuts could mean that petrol, for example, would be almost 40 cents cheaper per liter.

Currently, around 2.20 euros are being charged at gas stations for a liter of premium petrol, at the beginning of the year it was just under 1.70.

Proposals cost 26 billion euros

The reason for this is that oil has become significantly more expensive on world markets since the war in Ukraine.

Russia is one of the world's largest exporters of natural gas and oil.

Because of the sanctions, the demand for alternative suppliers and thus the price has increased significantly.

According to the bill, the proposed tax cuts would make natural gas cheaper by EUR 7.75 per megawatt hour.

A megawatt hour was recently priced at more than 200 euros on energy exchanges, at the end of 2021 it was 150 euros and the long-term average was between 10 and 25 euros.

However, the tax cuts demanded by business representatives would lead to significant revenue shortfalls for the state, which would have to take on higher debts to do so.

The VhU assumes costs of around 26 billion euros.

So far, the federal government has planned new borrowing of almost 100 billion euros for this year, which is already significantly more than the so-called debt brake in the Basic Law allows.

Federal Finance Minister Christian Lindner (FDP) actually wants to reduce the new debt from 2023 to less than ten billion euros a year, which would correspond to the debt brake.

In addition, the VhU President warned against completely stopping the purchase of Russian oil and natural gas.

The German economy is too dependent on it for that.

"An embargo would harm us more than the aggressor," Mang said.

But he also called on politicians to "put more speed into the expansion of renewable energies".

The war showed the dependency on Russian imports, which must be reduced.

So far, the association had been rather defensive on the subject of the energy transition and had placed the security of supply in the foreground.

"We have to accelerate the expansion of renewable energies and the power grid," says Mang.

Among other things, electricity storage systems would have to be set up that can compensate for the fluctuating green electricity production.

In the short term, however, the economy cannot do without the use of natural gas, it said.

That is why it is necessary to facilitate the use of fossil fuels such as coal or nuclear power again for the transition.

In addition, new sources of supply for natural gas should be developed, including the construction of terminals and pipelines for the delivery of liquefied natural gas LNG.

Its largest producer is the Emirate of Qatar.