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Merkel Says Clean-Energy Policy Must Allow Profits for Gas

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April 25 (Bloomberg) -- Germany’s Chancellor Angela Merkel said the country’s system to spur clean-energy generation needs to change, including reducing green subsidies paid by consumers, to ensure gas-fired plants are able to operate at a profit.

National and state leaders “in the next months and at least one to two years” need to find a way to change the so-called EEG law on subsidies, Merkel told a Frankfurt conference.

“We have to think about how to slow down the dynamics so that we get a sensible expansion of renewable energies but not a situation in which no gas-fired power plant can be operated profitably anymore and each gas plant has to be subsidized so it provides baseload capacity,” she said late yesterday.

Merkel has been trying to prevent a voter backlash as costs to expand clean energy surged after the country sought to more than triple the share of renewables in its power mix by 2050 while phasing out nuclear generation. Consumers in Europe’s biggest economy have seen power bills climb this year after a fee they pay for renewables jumped 47 percent to a record.

Groups that benefit from green subsidies need to accept cuts to help keep industry competitive as energy prices decline in countries including the U.S., the chancellor said.

The opposition Social Democratic Party, which has accused Merkel of mismanaging the switch from nuclear to a more climate-friendly power mix, urged her government to support a European Commission proposal to fix a glut in the bloc’s carbon market.

The SPD introduced a motion that will see lawmakers voting on whether to urge Merkel’s government to support delaying the sale of some carbon permits. This so-called backloading would be a “necessary step with signaling effect,” the SPD said. Merkel’s government remains undecided on backloading after the European Parliament rejected it in a vote on April 16.

To contact the reporter on this story: Stefan Nicola in Berlin at snicola2@bloomberg.net

To contact the editor responsible for this story: Reed Landberg at landberg@bloomberg.net

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