Households across Germany felt the weight of 2022's energy crisis, grappling with a dramatic increase in energy prices. Overall energy costs in Germany surged by 31% in 2022 compared to the previous year. To combat the adverse impacts of the 2022 energy crisis, Germany passed three major relief packages in 2022. This country briefing paper describes Germany’s policy response to the energy crisis of 2022 and provides a microsimulation-based summary of the distributional effects of energy price shocks on German households.

The European Commission's Fit for 55 package proposes two significant reforms to energy pricing in the EU: Energy Taxation Directive (ETD) reform; and extending emissions trading to cover emissions from buildings and road transport (ETS2). A concern among stakeholders is how these reforms would impact lower income households. Various policy mechanisms are under consideration to help address potential distributional impacts. Based on a microsimulation model developed by the Basque Centre for Climate Change (BC3) with IEEP, this report analyses a series of reform scenarios supported by graphical depictions of their distributional effects in Germany.

This project looks at the distributional effects of energy tax reform across Europe and develops recommendations for making the reforms socially and environmentally sound. Ecologic Institute contributes to this project with its expertise of German energy taxation and will translate the findings of the modelling exercise to the German context.