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Green groups say German energy reform painful, despite concessions

Source: Reuters - Wed, 2 Apr 2014 16:44 GMT
Author: Reuters
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By Madeline Chambers

BERLIN, April 2 (Reuters) - Green groups in Germany warned on Wednesday that plans to scale back subsidies for renewable power would slow down the country's so-called 'energy revolution', saying last minute concessions to help wind farm companies were not enough.

The deal on concessions agreed by Chancellor Angela Merkel and regional politicians late on Tuesday cleared the way for Berlin to finalise a draft law on reducing the subsidies - legislation that is being closely watched on power markets.

"Despite some corrections, the (plans) are painful ... The shift to renewable energy will lose momentum significantly as a result of this law," said Sylvia Pilarsky-Grosch, head of the BWE wind energy association.

Germany's move away from nuclear power and fossil fuels is one of Merkel's flagship policies, but the ballooning cost of subsidies threatens to undermine it.

The country's long-established and influential environmental campaign groups have become largely resigned to the inevitably of some reduction in generous subsidies.

But their opposition to details in the deal could still give some politicians pause.

The draft bill goes to cabinet on April 8 and could become law by August.

"The compromises will not stop a slowing down of the energy shift," said BUND environmental group.

The government plans to increase the share of renewable sources to 40-45 percent of total power production by 2025 and to 55-60 percent by 2035, up from about 25 percent now.

Initial plans to limit the expansion of onshore wind plants were watered down on Tuesday and offshore energy plants will also be given more support than originally planned.

Shares in wind power firms Nordex rose 7 percent on the news on Wednesday and stocks in wind turbine group Vestas also lifted.

The subsidies have been financed by a surcharge on electricity bills, borne largely by domestic consumers as many companies are exempt.

"Power will stay expensive because ... the government will not tackle industry exemptions," the co-chairman of Germany's opposition Greens, Simone Peter, told N-TV.

Around 2,000 of Germany's energy-intensive firms, including chemicals giant BASF and steelmaker ThyssenKrupp, have not had to pay the surcharge.

Brussels has launched an investigation into the exemptions and has been holding talks with Germany's Economy and Energy Minister Sigmar Gabriel.

The latest talks in Brussels ended without agreement on Wednesday, but Competition Commissioner Joaquin Almunia said he was confident the new German law would be in line with EU guidelines.

"The winners are clearly industrial companies," said energy expert Claudia Kemfert at the DIW economic institute, adding they would continue to benefit from some exemptions and low wholesale prices. (Additional reporting by Gernot Heller and Vera Eckert, Frank Siebelt in Frankfurt)

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