Chancellor Angela Merkel’s Christian Democrats (CDU) in the wake of the introduction of a CO2 price on transport and heating plans to abolish support for new renewable installations under Germany’s Renewable Energies Act (EEG).
Financing renewables via a levy on top of consumers' power bills since 2000 had resulted in one of the world's fastest expansions of wind and solar power - with renewable sources meeting 44% of Germany's power needs during the first half of this year.
Party leaders in a 27-page strategy paper approved by the federal board of the CDU also demand to simultaneously reduce a tax on electricity.
“The goal is to completely abolish the EEG levy whilst safeguarding [existing installations] and to reduce the power tax to a European minimum,” the strategy paper approved on Monday states.
“The guiding principle of our energy system of the future shouldn’t be the support or ban of certain energy sources, but solely the reduction of greenhouse gas emissions.”
The CDU leaders also demanded a technology-neutral approach to emission reduction, and said CO2-free electricity will increasingly become a primary energy source. But the paper didn’t state when EEG support should end, nor whether renewables should be supported through a different mechanism.
Given the vagueness of the proposals, Germany’s wind power federation BWE did not immediately react.
But Hans-Josef Fell, a former Green Party member of parliament and one of the main architects of the EEG, said the CDU clearly wants to abolish any support for renewables and even limit the share of green power in the energy mix.
“The ideology of the CDU is clearly that renewable energies need to prevail on their own and without support in the market,” Fell said in a comment. “We are talking of a market, in which fossil power generation continues to profit from considerable state subsidies.”
The CDU leadership’s push comes as a small number of first support-free solar projects are being developed in Germany, and several offshore wind projects won tenders in 2017 and 2018 with zero-subsidy bids.
The CDU’s coalition partner, the Social Democrats (SPD), in the wake of recent discussions about a ‘climate package’ had proposed to use the proceeds of a CO2 levy for the support of renewables, whilst reducing the EEG levy – but the proposal was shot down by the CDU.
Co-financing EEG support with funds from the federal budget could pose a risk regarding EU state aid rules, Wolfram Axthelm, managing director of Germany’s renewable energy federation BEE told Recharge in a comment.
“It would be simpler to cover the special compensation rule – meaning the exemption [from the EEG levy] for parts of industry - with funds from the federal budget,” Axthelm said.
“That would lower EEG costs significantly more than what is foreseen in the climate package.”
The BEE welcomes the CDU’s idea of lowering the tax on electricity.
According to finance minister Olaf Scholz (from the SPD), a planned CO2 levy until 2023 will amount to €18.8bn ($20.5bn), and should be given back to tax payers, for example in the form of a lower EEG levy, the Handelsblatt economic daily wrote.