Germany is finalizing plans to introduce gas price caps.

The unilateral move is part of the country's €200 billion euro package to limit the impact of inflation Under the proposals due to be officially announced on Wednesday, the average household would save around €1000 a year on their gas bills.

Big industrial companies would also benefit from price caps.

But in their case the measures come on condition of keeping existing operations in Germany and 90% of jobs in the country for a year.

So far, there's been no agreement on an eu wide price cap for gas for more on this.

Let's talk now to energy analyst and lecturer at the hearty school of governance, thomas O'donnell.

Hi thomas, lovely to see you.

It's really interesting that the government is attaching conditions to these gas price caps for companies.

Do you think it's very worried about a corporate exodus?

Well, thank you for having me kate.

Of course they're very worried back years.

Some years ago when the fracking revolution, natural gas revolution took started to take place in the United States and Germany and meanwhile had the highest prices in europe with energy.

Many energy intensive companies especially refining had already gone to Louisiana and the U.

S.

And now with an energy war versus Russia.

And the cake complete cut off by Russia of all the gas supplies that Germany particularly relied on so heavily it is a very serious situation.

Yes.

And they don't want to give money to companies if the company is going to take it and leave right away.

Exactly.

And on that very point, these measures come just a couple of days after the biggest chemicals company in the world announced major cost cuts in europe and an expansion of its operations in china.

Do you think these measures are going to be enough to prevent other companies from following suit?

Well, no, I think they'll take they'll take their lead from B.

A.

S.

F.

Look, german government policy, not only Merkel, but before is B.

A.

S.

F.

Policy, there is no difference between it.

B A S.

F owned part of a major gas field that Gazprom controlled up in your own boy, they got a significant amount of the gas that came through North Stream one as owners and only paid transmission and taxes.

This was central to their business plan, cheap Russian gas and, and just like certain politicians pushed this very hard for years, contrary to the advice of Eastern european countries of people in brussels and in the United States, it has happened exactly what they want, Putin has weaponized it.

And B A.

S F is in a big crisis.

Um, it's not clear how they're going to escape this.

They're building a big plant in china, which people are warning them this is another, another potential geopolitical mistake.

So we've got quite a lot of factors at play here now, managing gas prices is one thing, but with a recession looming, what else do you think the german government needs to do to keep companies afloat?

Uh, well, you know, there was a B I.

D.

The german federation of Businesses didn't a survey a couple months ago and they found something like a third of companies were actually fearing that they might become insolvent, go bankrupt and at least 60% saw a very difficult situation.

Look um, companies will go bankrupt.

It's an energy war and Germany, you know, prepared very poorly for it.

Uh, and there's an energy war and there will be casualties.

So the question is, how much will society will taxpayers say we need to support some of these that will go bankrupt and are going bankrupt.

Um, and how will that take place?

Will they see that as fair will it depends how much citizens feel their bills, their woes are being taken care of by the present price cap and subsidy program the government is announcing and on that notion of solidarity, the EU has failed to agree on a common gas price cap.

How damaging is it for countries to go alone?

Well, here's the problem.

Um, what we have to be very careful of is that the, the countries don't turn on one another.

For example, Germany has been able to fill its uh, its storage with the Russian gas cut off now, how did that happen?

Well by paying a very high price, by willing to pay whatever is necessary.

So people have talked about that, developing countries, Pakistan sri Lanka can't get gas because europe is buying it.

But between the european countries, if Germany is paying more and can pay more, that takes away from its neighbors.

So if we start going into a bit of a price war between the companies, the problem is, if some countries cap the price of gas, that means that the gas will go somewhere else if there is more available and that sets up an unpleasant competition, you can say.

So this has to be sorted out the european level.

We need a common policy.

We do indeed, thomas O'donnell, thank you very much, of course.