German cabinet passes plans for green energy rebate for industry

BERLIN Wed May 7, 2014 5:23am EDT

White House Budget Director Sylvia Mathews Burwell reacts during an interview with Reuters journalists in Washington, January 30, 2014.  REUTERS/Jonathan Ernst

White House Budget Director Sylvia Mathews Burwell reacts during an interview with Reuters journalists in Washington, January 30, 2014.

Credit: Reuters/Jonathan Ernst

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BERLIN (Reuters) - German Chancellor Angela Merkel's cabinet on Wednesday signed off on a draft law that grants energy-intensive firms a partial rebate on a renewable energy surcharge after months of wrangling with Brussels.

The plans mean the controversial benefits, which Germany's export-oriented industry has argued it needs to remain competitive especially with U.S. rivals, could remain around the 5.1 billion euros a year level which is granted now.

The draft law should be passed by the Bundestag lower house of parliament in the summer together with the flagship reform of the renewable energy law, designed to curb rises in the cost of power driven by the rapid expansion of green power.

The ballooning cost of generous subsidies to renewable energy producers threatens to undermine the ambitious shift towards green energy in Europe's biggest economy.

According to the draft law on rebates, companies will not get the full amount allowed by the European Union but will have to pay a minimum of 0.1 cents per kilowatt hour of electricity used towards supporting renewable energy.

Until now, the minimum payment for heavy energy users, including the aluminum and steel sectors and some big engineering firms, has been 0.05 cents.

After months of difficult negotiations, Germany and the European Commission agreed in April to continue to exempt some German companies from the surcharge. However, the EU guidelines will not be implemented in German law in full, partly because that would have raised the cost of the rebates. While the Commission reduced the number of sectors exempted, a greater number of firms could have benefited from more relief if the guidelines had been implemented exactly.

(Reporting by Markus Wacket; Writing by Madeline Chambers; Editing by Stephen Brown)

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