* Commission expected to announce formal probe on Wednesday
* Some say investigation alone will shatter confidence
* Carbon targets seen as too weak to encourage investment
(Adds detail, German industry reaction)
By Barbara Lewis
BRUSSELS, Dec 16 German heavy industry could
face a multi-billion euro bill from an inquiry by European Union
regulators into the country's energy subsidies that could also
jeopardise Europe's shift to greener fuel, campaigners and
Across the EU, politicians, business and ordinary consumers
have blamed green energy subsidies for pushing up fuel costs.
On Wednesday, the European Commission is expected to
announce its investigation into Germany's management of
subsidies as it executes its Energiewende, or move from fossil
fuel and nuclear to renewable power.
Some 2,300 German heavy energy users, including chemical and
steel firms such as BASF and ThyssenKrupp,
have been exempt from a green surcharge ordinary consumers have
The Commission, the EU executive, is examining whether the
exemptions of around 5 billion euros ($6.87 billion) per year
were unfair and should be paid back. A 51-page letter from the
Commission to the German government seen by Reuters spells out
concerns that the waiver was unlawful state aid.
A German Environment Ministry spokeswoman said only it
remained to be seen what the Commission would decide.
Groups representing smaller companies and ordinary consumers
said an enquiry was necessary as German households and small
business bore most of the cost of renewables.
Industry, meanwhile, faces the prospect of repaying
discounts received over several years. Utz Tillmann, head of
German chemicals trade group VCI, said the subsidies were vital
and appropriate as they offset competitive disadvantages.
HALT TO THE ENERGIEWENDE?
The final outcome of the investigation might be benign.
Germany could be cleared or just asked to meet certain
conditions in order to fall in line with EU rules.
But the enquiry alone into one of the most sophisticated
green energy laws could shatter investor confidence across
Europe in renewable energy, such as solar and wind, and it could
drag on for months or even years.
Doerte Fouquet, a Brussels-based lawyer at Becker Buettner
Held, said the implications went far beyond the industry waiver,
which the new German government would tackle.
"The problem is that with such a state aid investigation
decision, the whole renewable energy system may break down. This
could immediately affect running projects," she said.
The European Renewable Energies Federation (EREF), which
represents green energy, urged the Commission to think again.
"With an opening of a full investigation procedure, the
German Energiewende would come to a halt with immediate effect,"
Rainer Hinrichs-Rahlwes, EREF president, wrote in a letter to
the European Commission.
The Commission is also expected to announce on Wednesday a
separate inquiry into whether Britain's plans to fund nuclear
generation could distort the market.
Britain says it needs carbon-free nuclear power if it is to
generate enough energy and also to lower emissions. Even though
nuclear is a mature form of energy, it is not affordable without
Both renewable and nuclear energy make more economic sense
in the context of a high emissions-cutting goal. But the risk is
that on top of the uncertainty surrounding the Commission
investigations, future policy targets for EU emissions and green
energy will be too weak to give direction to investors.
Debate so far on 2030 targets, expected to be published in
January, has focused on a 40 percent emissions cut versus 1990
Although double the existing 2020 goal, the 40 percent
emissions goal would require very little new effort as Europe
has already nearly met its 20 percent target.
Kevin Anderson, energy and climate change professor at
Britain's Manchester University, said the European Union must
aim to cut emissions by around 80 percent by 2030, if it is
sincere about capping global warming at the 2 degree limit it
has said is needed to avoid the worst consequences.
Anderson, who has advised the British government on energy,
has written to Commission President Jose Manuel Barroso accusing
the Commission of working in a vacuum of scientific evidence.
A Commission source said it was policy not to comment on
individual letters, but all views were taken into account.
($1 = 0.7283 euros)
(Additional reporting by Foo Yun-chee in Brussels, Christoph
Steitz in Frankfurt, Andreas Rinke and Gernot Heller in Berlin
and Tom Kaeckenhoff in Duesseldorf. Editing by Jane Merriman)