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Merkel cedes control of energy shift to rival SPD

Source: Reuters - Fri, 13 Dec 2013 18:01 GMT
Author: Reuters
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* Schaeuble stays on as finance minister

* SPD's Steinmeier returns as foreign minister

* New government aims to start work after SPD members' vote

BERLIN, Dec 13 (Reuters) - Angela Merkel has ceded control of Germany's controversial shift from nuclear to renewable energy to her Social Democrat(SPD) rivals, who will take charge of ministries responsible for the environment and energy, according to SPD sources.

Merkel is on the verge of securing a third term as chancellor but is awaiting a green light from a poll of close to 475,000 grassroots SPD members. Results of the vote are expected on Saturday, allowing the new government to start next week.

One of its top priorities will be a reform of the complex renewable energy law, which has sent costs for consumers soaring because of generous incentives for solar and wind power.

The "grand coalition" government of Merkel's conservatives and the SPD has pledged to agree the reform by Easter.

SPD sources told Reuters SPD chairman Sigmar Gabriel would lead a ministry responsible for economy and energy policy, and SPD treasurer Barbara Hendricks would replace Peter Altmaier, of Merkel's Christian Democrats (CDU), as environment minister.

The surprise move gives Merkel's rivals control of the biggest domestic policy initiative of her second term, yet may also deflect any future blame from the chancellor, should the energy shift falter or prove deeply unpopular.

SPD sources added the CDU's Wolfgang Schaeuble would remain finance minister, while the SPD's Frank-Walter Steinmeier would return as foreign minister, a post he held between 2005 and 2009. SPD General Secretary Andrea Nahles would take the post of labour minister and the SPD's Heiko Maas that of Justice Minister.

Germany's nuclear exit was accelerated by Merkel after the Fukushima nuclear disaster in Japan in 2011. The last reactor is due to be taken off the grid by 2022.

The new government faces a delicate balancing act, reducing the incentives to help industry, while ensuring investment in renewables does not grind to a halt.

Subsidies for renewable energy are largely paid for by households, whose bills have almost doubled over the past decade and are now the second-highest in Europe. Heavy electricity users such as cement, steel and chemical plants are exempt from the surcharge to keep them from being priced out of global markets.

The renewables law has got Germany into hot water with Brussels however, on suspicion it infringes competition laws.

The European Commission is to open an investigation into the law, according to a draft letter sent by EU Competition Commissioner Joaquin Almunia to the German government and seen by Reuters.

The Commission can ask a government to recover aid granted to companies if this is found to have breached EU rules.

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