www.environmental-finance.com
24 September
Germany's Christian Democrat parties are likely to reduce the role of renewable energy feed-in tariffs and build new nuclear capacity if they win this weekend's federal election. In the run up to the election, the centre-right CDU and its partner the CSU backed a report from the federal government's competition advisory agency the Monopolies Commission calling for carbon trading to supplant feed-in tariffs.
The Commission attributed continuing and unacceptably high energy prices in Germany to market domination by the four major utilities. As part of its recommendations to address this, the Commission proposed Germany's Renewable Energy Act 2000 (EEG) be scrapped completely, in favour of what it regards as the more efficient incentive mechanism of carbon trading.
The EEG established a feed-in tariff system, paid for by end-users, which guarantees the prices paid to renewable energy generators. The system has helped underpin dramatic growth in Germany's renewable energy capacity, and has been emulated by other countries.
CDU parliamentary chief Michael Meister MP said the report showed that "state-steered support for renewable energy" had created an "unsettling blockage in investment" in Germany, adding that coal and nuclear energy should also be part of any balanced energy mix.
With conservative support, German utilities have already embarked on building or upgrading 20-30 coal power stations, obtaining support from the Social Democratic Party – part of the current coalition government with the CDU/CSU – by coupling coal with expensive carbon sequestration technology. CDU energy spokesman Joachim Pfeiffer played down the report, saying the EEG would be complemented by a "market premium" to support bringing renewable energy onto the grid.
The German Renewable Energy Association (BEE) fears this is merely code for dumping feed-in tariffs. It argues that feed-in tariffs have increased energy market competition by creating many smaller providers who sell energy on the market. Abandoning the EEG would reverse this trend, bankrupt providers and increase market concentration, it argues. Secondly, BEE argues that, unlike the feed-in tariff system, carbon trading is a blunt instrument not tailored to specific renewable technologies.
Although the CDU has not officially changed its policy on the EEG, it does now officially support extending the 2021 date for shutting down Germany's nuclear generation fleet. If the election goes as observers predict, they will form a coalition with the pro-business Free Democrats (FDP), who advocate building new nuclear energy stations.
In an election campaign where direct confrontation on policy has been the exception rather than the rule, another report indicates by proxy that the CDU/CSU would support the FDP on this, claimed Social Democrat environment minister Sigmar Gabriel, who is campaigning against nuclear energy and in favour of the EEG.
The report, a study completed in June but allegedly suppressed by CDU research minister Annette Schavan, proposes new nuclear capacity as the best option for climate protection and economic efficiency, based on the recommendations of about 100 German scientists. Gabriel said further evidence of the CDU/CSU's intentions were demonstrated this week when he revealed that the CDU-held economics ministry is to commence a study in October on security in high-temperature nuclear reactors, without notifying his ministry.
The German media reported that Angela Merkel will seek to present herself as a "green visionary" at this week's G20 meeting for domestic consumption purposes, but indications are that German environmental policy is now set to become rather more complex.
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