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25/08/2016

Germany extends disputed renewable energy subsidies to industry

Trade & Society

Germany extends disputed renewable energy subsidies to industry

Wind turbines on a wintry field in Dithmarschen, Germany. December 2010. [BlueRidgeKitties/Flickr]

The value of exemptions to green energy charges Germany grants heavy industry will rise to €5.1 billion in 2014 from last year's 4 billion euros, even though the exemptions are subject to an anti-competition probe by the European Union.

Germany's Federal Office of Economics and Export Control announced the 2014 figures on Tuesday. Due to the probe no exemptions will be paid in 2015.

Around 2,000 German heavy energy users such as BASF and ThyssenKrupp have been exempt from a surcharge ordinary consumers have to pay, but face the possibility of having to pay back discounts should the EU rule they were unfair.

The European Union said Germany's industrial discounts on green surcharges might sometimes be justified to keep energy-intensive firms in Europe, but it had concerns that aspects of Germany's law distorted competition.

The European Commission is reassessing green subsidies as technologies such as onshore wind and solar power become more competitive with conventional energy forms (see background).

The Commission has also promised to analyse the impact of energy costs on industry.

Germany is undergoing Europe's deepest energy transformation as it exits nuclear energy. The biggest task facing the new government is a reform of the law on renewable energy.

European Union antitrust chief Almunia is due to visit Berlin next Monday to meet Economy Minister Sigmar Gabriel.

Germany has signalled it would be prepared to restrict the subsidies to an extent, but has made clear it wants to shield its industry from high power costs to help keep it competitive. 

Background

Recently, the powerful employers’ group BusinessEurope called on European Commission President José Manuel Barroso to radically shift the EU's energy policy away from climate change mitigation towards cost-competitiveness and security of supply. [more]

But a EU summit dedicated on energy with the objective of lowering prices and boosting the Union’s industrial competitiveness, held on 22 May, ended up without major decisions. [

more]

EU Energy Commissioner Günther Oettinger this week unveiled a document on state intervention in power production that warns EU energy prices will continue to rise unless governments take steps to reduce green subsidies.

As most renewable energies are still more expensive than fossil fuels, a variety of support schemes have been put in place to accelerate their uptake and meet the EU's goal of sourcing 20% of its energy from renewable sources by 2020.