The new German renewables act – make or break for renewable energy in Europe?

Proposals for a review of the German renewables legislation, which is seen by many as being the European catalyst for renewables, sparked fierce debates on the future of the sector in Germany and beyond.

In August 2003, two years after the launch of the initial act, the German government presented a review of the legislation. Despite the positive assessment of the efforts to date and although the new proposal was generally well received by the German renewables industry, an open battle now broke out within the German political and business world on the future of green energy in the country. The discussion primarily revolves around the subsidies for different renewables and the costs involved for the tax payer and the end consumer.

 

TheGerman governmentseems to be split over the future of renewable energy and the revised renewables act.

Theenvironment minister Jürgen Trittin (Greens)maintains that the new act will reduce the overall costs for the tax payer and the consumer, and create more consistent framework conditions for investors, thus boosting investor confidence. It will moreover respond to calls for a better legal framework and more transparency for investors, network operators and consumers. The structure of subsidies will be adapted to actual conditions and network access will be facilitated for decentralised producers.

Theminister for economy and employment, Wolfgang Clement (SPD), however, is not happy with the proposal. In German newspaper reports, he has been quoted saying that the economic implications of promoting renewable energy and issues of international competitiveness have to be taken into account, claiming that the proposed legislation would lead to a rise in electricity prices that would be difficult to bear by the (energy intensive) industry. Moreover, he criticised the cost implications of the subsidy structure.

TheGerman Electricity Association (VDEW)calls for more efficiency in the production of renewable energy, stating that neither the current nor the proposed system of subsidies is sustainable. VDEW doubts that the proposed increase in compensation for electricity derived from renewable sources would have a direct positive impact on the growth of renewable energy, but it would primarily result in steadily increasing electricity prices for consumers. The primary goal must therefore be to make the renewables sector economically viable.

TheGerman renewable energy industryandenvironmental NGOswelcomed the new renewables act and the long-awaited changes it brings, while criticising only a few technical details. They now called for a rapid implementation of the proposal in order to provide a reliable legal framework and maintain investor confidence in the sector, strongly opposing the current dispute which it fears will cost valuable time and create unnecessary uncertainty.

TheEuropean renewable energy industryalso welcomed the contents of the proposals, but criticised the German debate, fearing that it might undermine investor confidence on Europe's largest market for renewable energy technologies. A successful German renewables act is seen to be a crucial catalyst for persistent efforts at EU level, as the Commission is expected to propose a new renewables framework as early as 2005. Critics claim that changing the German system just two years before a new EU proposal might have a detrimental impact on investor confidence.

 

In April 2000, the German government passed legislation to promote the production of renewable energy in Germany. The aim was to double the share of electricity produced from renewable sources from 6,3 per cent in 2000 to 12,5 per cent in 2010. This sparked a real boom in the renewable energy sector in Germany, which now has an annual turnover of 8 billion euro, while the share of renewables increased to 8 per cent. The German legislation is considered to be a crucial engine for EU efforts in this area, having inspired the adoption of similar initiatives in other countries such as Austria, France, Spain and the Czech Republic.

The German law is in line with the EU target of increasing the share of renewable energy in the overall consumption, which is currently at 6 per cent. The Renewable Electricity Directive of 27 September 2001 foresees that the Member States double the use of renewable energies in the gross national energy consumption to achieve an EU average of 12 per cent by 2010. The Commission also wants to achieve an increase of electricity produced from renewable sources from 14 per cent in 2000 to 22 per cent in 2010 in Europe.

 

The review of the German renewables act is currently being debated within the German government and with regions and stakeholders. The act was originally scheduled to enter into force on 1 January 2004, but experts predict a considerable delay. It is now expected to become effective around April 2004.

The World Conference on Renewables will be held in Bonn from 1-4 June 2004.

The Commission is expected to propose new EU framework on renewables in 2005.

 

 

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