Merkel vows to rein in renewable subsidies

BERLIN Wed Jun 12, 2013 7:42am EDT

1 of 2. German Chancellor Angela Merkel speaks at the Federation of German Industry's (BDI) Day of the German Industry conference in Berlin, June 11, 2013.

Credit: Reuters/Thomas Peter

BERLIN (Reuters) - German Chancellor Angela Merkel promised on Wednesday to scale back Germany's generous system of subsidies to the renewables sector if she is re-elected in September, a move that would reduce the costs of her green revolution on consumers.

Merkel's policy to wean Europe's biggest power market off fossil fuels and to embrace renewables has led to a boom in green energy sources, but ballooning costs have led to calls for cuts to feed-in tariffs and for industry to pay more.

"Dealing with the renewable energy reform is the most urgent of the energy topics, in my view," Merkel told a conference of the BDEW utility industry group.

Energy prices are likely to become a hot election topic as consumers have been hit by surcharges which pay for the energy shift. Due in part to fears that German industry will become uncompetitive if it has to pay too much for energy, many firms have enjoyed exemptions from some of charges, raising the bill for households.

"I want a renewable energy law amendment in which feed-in tariffs are not given up, that is an incentive to push things forward, but it will be necessary for those who get support for renewable energy to participate more in grid expansion, energy supply, storage and similar things," Merkel said.

She also reiterated her priorities of power supply security, affordability and a focus on climate protection.

But Merkel, who polls show is likely to win a third term albeit possibly with a different coalition partner, gave few details of her plans.

The conservative chancellor may have to abandon her current partner, the pro-business Free Democrats (FDP) and form a 'grand coalition' with the opposition Social Democrats (SPD) who traditionally support the coal industry but who with the Greens originally started Germany's nuclear phaseout.

EMBEDDED INTERESTS

Any reform to the renewable energy law and its system of subsidies are a political balancing act as energy policy pits the entrenched interests of a strong green lobby with influential German industry and the electorate.

The head of the BDEW made clear how essential reforms are, saying the problems are well known and that the government had spent long enough thinking about the issues.

"The expectations are clear: in the autumn there must be action. There is no period of grace for the new government," said BDEW head Hildegard Mueller.

"The foundation for all this must be a basic, decisive and comprehensive reform of support for renewable energy," she said.

Merkel pointed to some areas where more progress had to be made.

Delays in the planned expansion of the transmission grid had to be cleared, she said, adding that northern German states should boost wind power capacity as they are best suited while supply to southern states must be guaranteed at the same time.

She also addressed the issue of gas plants which have been pushed out of the market partly because of the collapse of the EU's CO2 emissions certificate market which has helped coal plants to produce power with higher emissions more cheaply.

"That can't be right" said Merkel, adding something had to be done to ensure gas plants could work more profitably.

Merkel said that something had to be done about the EU's emissions trading scheme, the 27-member bloc's main tool to fight climate change, but she did not specify what. The European Commission has proposed holding back some certificates to try to prop up prices, but so far has not got its plans through.

The cabinet on Wednesday passed a new law helping Germany to avoid power outages in winter during its transformation process up to 2017. This empowers the energy regulator to steer the reserve-building process but many BDEW delegates fear there is already too much state in the market.

(Editing by Jeff Coelho)

FILED UNDER:
We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/
Comments (3)
Junifer wrote:
“I want a renewable energy law amendment in which feed-in tariffs are not given up, that is an incentive to push things forward, but it will be necessary for those who get support for renewable energy to participate more in grid expansion, energy supply, storage and similar things,” Merkel said.

In other words, Merkel wants to continue what she’s doing but she must craft things differently to get re-elected. Another sock puppet for an industry looting millions while creating energy poverty, killing jobs, and since Germany’s carbon emissions continue to rise…..this has all been for nothing. KICK HER OUT! She’s a dangerous and willfully energy/climate ignorant shill.

Jun 13, 2013 11:27am EDT  --  Report as abuse
Junifer wrote:
Angela Merkel: The Emperor of Wind has no clothes. Stop pretending this is a viable, cost effective, reliable and effective way to power your country. You’re bleeding money, killing jobs by driving industry out, creating economic havoc for utility providers, creating energy poverty among your people…. Brush the corporate devils from your shoulders and read something that explains what is really happening, not what you want to believe is happening. Putting in a new money pipeline to the same failed policy’s will not make any difference. Are you the only one who does not understand that?

Jun 13, 2013 11:34am EDT  --  Report as abuse
SteveK9 wrote:
Politics cannot affect the laws of Physics. To power an industrial civilization with wind and solar is going to be very, very difficult. It is much more likely there will be an increased reliance on brown coal (lignite), which is already happening.

Jun 13, 2013 12:35pm EDT  --  Report as abuse
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

Photo

California's historic drought

With reservoirs at record lows, California is in the midst of the worst drought in decades.  Slideshow