Merkel Challenges EU On Renewable Energy Tax Break – Tax

December 25, 2013 by  
Filed under Green Energy News


by Ulrika Lomas, Tax-News.com, Brussels

25 December 2013

On a confrontation course with Brussels, German Chancellor Angela Merkel has pledged
to defend the renewable energy tax (EEG-Umlage) rebate currently benefiting energy-intensive
companies in Germany.

The European Commission has announced plans to launch an in-depth investigation
to determine whether or not the EEG-Umlage reduction, granted to energy-intensive
businesses, is compatible with European Union (EU) legislation. Opinion in Germany
is divided. Critics insist that following a recent extension of the
tax break, the measure now benefits companies even though they are not facing
tough international competition.

The figures speak for themselves. This year, around 1,700 companies are due
to take advantage of the rebate, soaring to approximately 2,800 next year.

Chancellor Merkel emphasized that both she and the German Energy and Economy
Minister Sigmar Gabriel intend to make very clear to the European
Commission that Germany wishes to remain a strong industrial location. Germany
needs competitive companies, she argues.

Given that this issue concerns companies, it therefore also concerns jobs,
Chancellor Merkel stressed. Although the German Government aims to work closely
alongside the Commission, it will nevertheless underline at the same time that
Europe will not be stronger if jobs are endangered in Germany.

Chancellor Merkel alluded to the fact the EU Energy Commissioner Oettinger
is to submit a report to the European Council in February, listing all the subsidies
that are currently accorded in Europe to compensate for electricity prices.
She warned that as long as there are countries in Europe where power for industry
is cheaper than in Germany, there is no reason to consider that Germany is “contributing
to a distortion of competition.”

Under the Renewable Energy Law, as amended
in 2012 (EEG-Act 2012), energy-intensive industries are granted reductions on
the EEG-surcharge.

The Commission also intends to investigate the reduction on the EEG-surcharge
granted when a supplier sources 50 percent of his electricity portfolio from
domestic renewable electricity (“green electricity privilege”).

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