UPDATE 2-German industrial base at risk if green energy shift fails

January 21, 2014 by  
Filed under Green Energy News

* New economy min to present reform of green incentives on

* Gabriel attacks Brussels, says will protect German

* Germany’s energy shift a flagship policy for new Merkel

(Adds criticism of energy blueprint)

By Madeline Chambers and Vera Eckert

BERLIN, Jan 21 (Reuters) – Germany risks undermining its
industrial base if it fails to undertake radical reform of
existing incentives for the country’s renewable energy sector,
its new economy minister said on Tuesday.

German firms must stay competitive, Sigmar Gabriel said one
day before he outlines planned changes to a renewable energy law
that would make deep cuts in financial support for green energy.

“We have reached the limit of what we can ask of our
economy,” he told the Handelsblatt energy conference in his
first major speech as economy minister with responsibility for
energy policy and Germany’s shift to renewables.

“The energy transformation has the potential to be an
economic success, but it can also cause a dramatic
de-industrialisation of our country,” he warned.

Export-oriented companies have warned that a surge in power
costs, caused largely by the green power incentives, will make
them internationally uncompetitive and some have even threatened
to move production abroad.

Industry accounts for around a quarter of Germany’s economy.


In a blunt attack on Brussels, Gabriel also made clear he
would defend German interests against interference from the EU.

“The Commission is using competition law to ‘Europeanise’
national energy policy,” said Gabriel, who will outline his
plans to Chancellor Angela Merkel’s cabinet on Wednesday.

The EU is investigating exemptions granted to Germany’s
energy-intensive companies from charges that fund green
incentives. Apart from those with exemptions,
all power consumers pay for the ‘green revolution’ via a
surcharge added to their electricity bill.

Some 2,000 of Germany’s’ heaviest energy users fear they may
have to repay discounts worth around 5 billion euros a year.

Markets have been waiting for Gabriel, who is chairman of
her Social Democratic Party (SPD) coalition partner, to show his
cards since he took office last December.

Germany switched to renewables under an SPD-Greens
government more than a decade ago, but Gabriel’s party has its
roots in the trade union movement and is traditionally a
champion of the coal industry.

Merkel gave the transition an unexpected push when she
accelerated the exit from nuclear power after Japan’s Fukushima
disaster in 2011. The shift is one of Merkel’s most significant
domestic policies and is being watched around the world.

Germany faces a delicate balance to maintain a boom in
renewables while also ensuring power is affordable to consumers.
It wants to raise the share of renewable power to 40-45 percent
in 2025 from about 25 percent.


“We must make the energy shift an economic success … No
one around the world will follow us, otherwise,” Gabriel said,
adding the cost of the support under the renewable energy law
was about 24 billion euros ($32.55 billion) a year.

According to a draft proposal seen by Reuters, Gabriel wants
Germany to cut the support price paid for electricity from solar
and wind power generators by about a third by 2015.

Feed-in tariffs paid to renewable power generators will be
cut across all technologies to an average of 12 cents per
kilowatt hour by 2015 from 17 cents/kWh.

Industry has broadly welcomed the plans for the incentive
cuts, which Gabriel wants to push through by the summer.

But representatives of the wind and power branches, Greens
politicians and some Social Democrats have attacked the plans,
especially the idea of reducing subsidies for onshore wind.

“This is like slamming on the brakes and leaving big skid
marks,” said Eveline Lemke, Greens economy minister in the state
of Rhineland Palatinate.

Gabriel said he was open to discussions about his plan.

Although Merkel’s right-left coalition has a big majority in
the Bundestag, the Bundesrat upper house, which represents the
16 federal states, could delay the law.
($1 = 0.7373 euros)

(Additional reprting by Vera Eckert and Christoph Steitz.
Editing by Tom Heneghan)

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