Germany, EC agree over surcharge

A coal-fired power plant in Gelsenkirchen, Germany

Germany's heavy industry will still be exempt

German energy minister Sigmar Gabriel in lengthy negotiations with the European Commission has reached a compromise on exemptions for heavy industries in the payment of a surcharge to finance the expansion of renewables (EEG surcharge).

Germany also under new EC rules for state aid that will be made public later today will still be able to exempt energy intensive companies from the payment of the EEG surcharge without risking having feed-in tariffs from its Renewable Energies Act (EEG) being labeled as illegal state aid by competition commissioner Joaquin Almunia.

But the country under a new rule will limit the number of companies entitled to the exemption to around 1,600 from more than 2,000 now, the energy ministry said.

“In essence this is about many, many jobs,” Gabriel said.

“We’re not talking about industrial lobbying, but about hundreds of thousands of jobs in this country.”

Gabriel has long argued that Germany’s industry that with 23% still represents a much higher share of gross domestic product than in most neighboring nations, is acting as a stability anchor for Europe’s fragile recovery.

The opposition Green party and renewable energy groups wanted industry exemptions to be reduced much further as the more than €5bn a year deriving from the exemptions have to be paid by other power consumers by means of a higher EEG surcharge.

Gabriel again played the jobs card, claiming that each household as a result of the exemptions faces no more than an additional €40 per year.

“To put thousands of jobs in danger for €40 I consider a frivolous undertaking,” he said.

The government in Berlin will weave in the EEG surcharge exemption rules into a reform of the legislation that was approved by the cabinet yesterday.

After the compromise, Germany will be able to continue using FITs for renewables although the EC in its new environmental and state aid guidelines wants EU member states to shift from FIT-based support systems to more market-based systems.

Berlin has long argued that the EEG doesn’t amount to state aid because FITs are paid by electricity consumers on top of their power bills and not by the state.

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