Monday's (17 February) meeting between German Energy Minister Sigmar Gabriel and Competition Commissioner Joaquín Almunia revealed a change of mood between Berlin and Brussels in the discussion over green energy rebates for companies.
Just a few weeks ago, Gabriel claimed that the European Commission's involvement in national energy policy, in the name of EU competition law, went too far. But the minister seemed to have changed his inclination by the time the energy minister spoke with Almunia in Berlin this week.
"These reservations were never mentioned", Almunia said after a discussion billed as "positive and constructive". A concrete agreement is expected to be found when Merkel's government signs off on more specific reforms on 9 April.
For the time being it is already clear that German companies with high energy consumption will continue to be exempted from the green energy surcharge. In accordance with the Renewable Energy Law (EEG), the surcharge is calculated from the difference between the target price for energy on the market and the fixed feed-in payment for renewables.
The EEG measure is a part of the German government's implementation of the Energiewende (energy transition), which aims for a reduction of fossil fuels and nuclear power generation.
Following reforms to EEG, Almunia said companies from industries processing steel, aluminium and zinc would "definitely be on the list" of those eligible for relief from the surcharge.
Almunia: Exceptions must remain exceptions
Gabriel and Almunia have not yet been able to agree on concrete details for industry sectors which could be exempt from the surcharge. Nevertheless, the Commissioner named two criteria to be fulfilled at all costs. First, within any given sector, only a minority of firms may profit from the exemption. Second, this "special treatment" must be justified by the fact that energy-intensive companies would not be able to stand up to competitors outside the EU.
As a general rule, companies are only proportionally exempt from the surcharge. Almunia made it clear that the level of exemption must also be dependent on the total number of companies: the longer the list of companies receiving relief, the lower each exemption will be. Conversely, individual companies can count on more savings if the list is shorter.
Green energy rebates are currently higher than ever and are increasingly carried by consumers. In 2012, the German federal government made revisions to the EEG law. Since then, companies with an energy consumption level of one gigawatt hour per year and an electricity cost share of more than 14% can be exempt from paying the EEG surcharge.
Last year alone, the number of companies in this category grew from 1,720 to 2,098. Together, they will be spared around €5.1 billion in surcharge costs over the year 2014.
In December 2013, the European Commission initiated state aid proceedings against Germany on the grounds that the EEG exemption is a violation of EU competition law. The move was also a reaction to rising complaints from consumers, who shoulder the brunt of green energy rebates reflected by rising energy prices.
Agreement on 9 April
A final agreement between Brussels and Berlin over future support for renewable energies and the controversial green energy rebates is expected to be met by 9 April this year.
By that time, Gabriel intends to conclude reforms of the EEG, ensuring its compliance with EU law. "We need European rules", Gabriel said.
In light of industry exemptions, the vice chancellor also pointed out that such a reform must "maintain the strength and the basis of German industry". Still, Gabriel said he and Almunia agree that long-term expansion of renewables should occur through auctioning schemes.
On 9 April, the European Commission also intends to determine its own guidelines on environmental and energy state aid, effective on 1 July and valid until the year 2020.
Campact warns of 'horse-trading'
The NGO Campact warns of "horse-trading to the detriment of the Energiewende".
"Instead of putting the brakes on wind energy, Gabriel should finally put an end to the billions in gifts to energy-intensive companies. Then consumers would actually be unburdened, through the energy price. Only companies that can prove international competitiveness and are investing in energy efficiency should still be allowed to benefit from industry rebates", said Oliver Moldenhauer from Campact. He fears Gabriel will make concessions to the European Commission over support for wind and solar to avoid greater cuts to industry exceptions.
The German Green Party calls for a swift agreement over EEG reforms. Internationally competitive, energy-intensive industries as well as planners and developers of renewable energy facilities must have restored planning security as soon as possible.
"Our view is that, in the future, exemptions from the EEG surcharge should be strictly limited to energy-intensive companies which are actually competitive on the international market," said the party's faction leaders in the Bundestag, Simone Peter and Anton Hofreiter.
"It appears the German government lacks the courage to undertake real reforms to unburden medium-sized and private consumers. As it stands, it will not be possible to dynamically continue the Energiewende and lower EEG costs."