April 17, 2014

Germany Clears Changes to Green Energy Law

Chancellor Angela Merkel’s cabinet agreed yesterday to revamp Germany’s green energy laws to curb the high cost of power in Europe’s biggest economy and head off the threat of a political backlash.

The changes unveiled by Economy Minister Sigmar Gabriel came after Brussels agreed to slow the pace of phasing out government backing for alternative energy, as a result paving the way for Merkel to press on with her ambitious energy plan — the so-called Energiewende.

Under the Energiewende, Germany aims to end nuclear power and to move away from fossil fuels while boosting the contribution of green energy to the national grid from 25 per cent at present to between 40 and 45 per cent by 2025, and 55 and 60 per cent by 2035.

Merkel abandoned her strong backing for atomic energy after the Fukushima nuclear disaster in Japan in March 2011, and announced plans to shut down all nuclear plants by 2022.

The Energiewende represents a central plank of Merkel’s four-month-old conservative-led coalition with the left-leaning Social Democrats (SDP), with Germany the only major economy to launch such a far-reaching makeover of its energy sector.

“It’s not about lobbying from industry, but about (the threat to) hundreds of thousands of jobs,” said Gabriel.
The draft law includes reducing government support for wind and solar energy, which was seen as driving up the power bills for both consumers and businesses.

This, in turn, could slow the shift away from nuclear energy towards the greater emphasis on green power.
After warning about the threat posed to German companies’ international competitiveness by sharply rising power bills, German industry welcomed the government changes.

“The future rules represent the chance to permanently preserve industrial jobs in Germany,” said German Federation of Industry President Ulrich Grillo. Germany electricity charges are among the highest in Europe.
But environmental groups and the opposition Green Party attacked the government’s planned reforms as representing a setback to promoting clean energy in the country.

“While climate transgressors are to receive relief, environmentalists are being asked to pay,” said Federal Solar Industry Association Chief Executive Carsten Koernig.

Concern about rising power costs has represented a major political threat to the Energiewende, which until now has enjoyed widespread support in environmentally conscious Germany.

Also until now, some 2,100 companies received government support totalling 5.1 billion euros ($3.7 billion) a year.

But according to the plan set out by Gabriel about 500 companies such as brown coal and animal feed groups will lose their access to cheap power when the government cuts back support.
The remaining 1,600 companies that are heavy energy users such as steel and chemical groups along with urban transit companies and dairy factories, will continue to receive state support — meaning that will retain a discount on their power bill. 

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