Merkel Cabinet Backs Clean-Energy Revamp to Slow Price Gains

Chancellor Angela Merkel’s cabinet backed changes to Germany’s clean-energy law to try to slow gains in power prices already the second-highest in the European Union and reduce dependence on fossil fuels.

State support for wind and solar power will be reduced with the overhaul of the 14-year-old law. Heavy users like ThyssenKrupp AG, Linde AG and Bayer AG will also keep 5 billion euros ($7 billion) of tax rebates after a reduced list of eligible companies was cleared with the European Commission, Economy Minister Sigmar Gabriel said.

Rising prices because of excessive clean-energy subsidies “have become the biggest problem by straining our economy and industry,” Gabriel told reporters in Berlin. “We urgently need this fresh start to the energy switch.” The list of businesses cleared by Europe for rebates was cut by about 400, he said.

Aid for industry in the biggest European economy underpins Merkel’s push to shift Germany toward renewable energy after the Fukushima reactor meltdown in Japan prompted her decision to close all nuclear power plants by 2022. Her plan would more than triple Germany’s share of renewable-energy sources to 80 percent by 2050, from about a quarter now.

The EU Commission doesn’t plan to make German companies repay rebates on green-energy taxes they received under German law, Deputy Economy Minister Brigitte Zypries said yesterday in Hanover.

Aid Dispute

Germany retained most of the power-fee rebates to companies in industries such as steel, aluminum and chemicals, even as the EU is investigating whether the exemptions violate competition rules.

About 1,600 companies will benefit from rebates from the EEG-Umlage, a mandatory supplement added to power bills to finance renewable subsidies, Gabriel said.

Companies that qualify for the aid will pay 15 percent of the EEG-Umlage, he said. Companies that currently benefit from the rebates but are excluded in the new list will pay 20 percent of the fee. Companies not on an EU Commission list of 65 privileged industries may still qualify for the aid if their power costs exceed 20 percent of production costs, Gabriel said.

The new rules “are an important political success” and will secure jobs, Utz Tillmann, head of the VCI chemicals lobby representing about 1,650 companies with 436,000 employees, said today in an e-mailed statement.

Not Happy

Not everyone was happy with the changes.

“Climate protection, renewables” and those without privileges “are the losers,” Oliver Krischer, a lawmaker with the opposition Green Party, said in an e-mailed statement. “While industry is benefiting from the energy switch, private consumers are paying for it.”

Germany has the second-most expensive electricity prices for private households in the 28-nation EU after Denmark, according to Eurostat.

New renewable power plants with a capacity of 500 kilowatts or more will have to sell electricity at normal market prices from Aug. 1, speeding up plans to do so in 2015. Until now, power produced by such plants was 100 percent subsidized.

Germany’s plan “makes the economy less dependent on increasingly scarce fossil fuels and creates new growth areas with considerable potential for jobs,” according to the bill containing the changes to the law.

Merkel agreed last week under pressure from state governments to temper planned cuts in support for wind and biomass energy. The overhaul would still reduce aid payments for onshore wind by as much as 20 percent next year compared with 2013, reduce an installation target for solar power and lower the target for sea-based wind turbines to 6.5 gigawatts by the end of the decade from 10 gigawatts.

While the revised EEG will prove a fresh start to energy policy, “many other questions aren’t resolved; the grids, what we do with conventional power stations, how we integrate all of this into Europe,” Gabriel said yesterday in an interview with ARD television.

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