UPDATE 3-Brussels, Berlin still at odds over green energy law

Thu Jul 3, 2014 12:56pm EDT

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By Barbara Lewis

BRUSSELS, July 3 (Reuters) - Berlin and Brussels clashed over Germany's green energy law on Thursday, with Chancellor Angela Merkel reacting angrily to suggestions from Europe's competition chief that Germany had not done enough to comply with European rules.

A ruling from the EU's highest court on Tuesday raised hopes in Germany that its revamped renewables legislation - which aims in part to shelter heavy industry from the cost of funding green energy - was already in line with EU law.

But EU Competition Commissioner Joaquin Almunia said that was not the case, because imported energy would not be treated in the same way as domestically-produced fuel.

"Imported electricity cannot be given discriminatory treatment," Almunia told reporters. "We need to find with the German authorities a good way to eliminate our concerns."

Merkel hit back, saying the Commission had created a degree of insecurity, which she would fight "with all (her) power".

The Commission should show understanding of Germany's difficulties as it seeks to reform a 15-year-old subsidy system and bring it more into line with markets, she told a meeting of her Christian Democrat party's economy committee in Berlin.

The European Commission, the EU executive, announced late last year it was launching a full investigation into Germany's renewables law.

That inquiry is likely to be lengthy and Almunia said he had not ruled out that German industry would have to pay back subsidies it received under the old regime, although he did not give any figures.

Finding a solution to the Commission's problems with the revised German green energy law should be quicker.

Almunia said it was possible that could be achieved before the Commission's summer break, which begins on Aug. 1, but he added: "It's not in my hands."

TECHNICAL ISSUES

The issues at stake are technical and concern the extent to which subsidies are allowed for green energy, as well as how to prevent discrimination against imported renewable energy.

Tuesday's ruling from the EU's top court found Sweden's renewable support scheme to promote national green power was compatible with EU law, even though Sweden had refused to provide support for non-domestic green power.

German Economy Minister Sigmar Gabriel welcomed that ruling, saying it had removed any lingering EU obstacles to Berlin's renewable energy law.

Almunia said he took the ruling into account, but it was distinct from the situation in Germany, where green power is being imported and treated differently from domestically produced green energy because of the way levies are distributed.

If consumers have to pay a surcharge on both domestic and imported electricity but revenue from the surcharge is used only to finance domestic electricity producers, the Commission says imported electricity may be disadvantaged and made comparatively more expensive.

Matthias Lang, partner at law firm Bird & Bird in Duesseldorf, said he agreed with Almunia that the German government and industry still had legal issues to solve over subsidies and exemptions handed to German industry from payments to support green energy.

Germany, Europe's biggest electricity market, borders nine countries and is a net exporter of power, although it imports some green energy, which Almunia estimated at less than 10 percent of the total.

Renewable power in Germany has become a political battleground as heavy industry, which uses very large amounts of power, some of which it produces itself, says it will cease to be competitive if it has to contribute as much as other users to subsidising development of renewables.

"When there is a national problem, it is very easy to blame Brussels," Almunia said. (Additional reporting by Vera Eckert in Frankfurt and Stephen Brown and Andreas Rinke in Berlin; Editing by Dale Hudson and Mark Potter)

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