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German 'green revolution' may cost 1 trln euros-minister

Source: Thomson Reuters Foundation - Wed, 20 Feb 2013 13:03 GMT
Author: Reuters
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BERLIN, Feb 20 (Reuters) - Germany's transition to renewable energy may cost up to 1 trillion euros (${esc.dollar}1.34 trillion) in the next two decades, the environment minister said on Wednesday, piling pressure on his opponents to back plans to cap power price rises before the election.

With an eye on the September vote, Peter Altmaier, one of conservative Chancellor Angela Merkel's most trusted ministers, has outlined plans to rein in subsidies for renewable power which have pushed up consumers' electricity bills.

However, his plans may be doomed as the opposition Social Democrats (SPD) and Greens have reservations and could block legislation in the Bundesrat upper house.

"The costs of our energy reform and restructuring of energy provision could amount to around 1 trillion euros by the end of the 2030s," Altmaier told the Frankfurter Allgemeine Zeitung newspaper.

"We have maybe our last big chance to lay the right foundations to make this a success. That means the energy switch must be economically justifiable and must be affordable."

Soon after Japan's Fukushima disaster in 2011, Merkel set out ambitious targets for green energy and accelerated the phaseout of nuclear plants.

Renewables are due to account for 35 percent of German power in 2020 and 80 percent by 2050.

High subsidies have boosted solar power and to some extent wind energy in Germany but have been financed in part by a surcharge imposed on households and many firms who have warned they may grow less competitive in global markets.

To ensure power is affordable, Altmaier wants to cap increases in subsidies for renewable power for two years and suspend feed-in tariffs to new installations.

Energy intensive firms, largely exempted from surcharges, may also have to pay.

BURDEN

Altmaier told the newspaper his plans, which last week won the support of Merkel's coalition partner the Free Democrats (FDP) despite some initial criticism, could save 300 billion euros.

Power and carbon traders are watching the plans closely.

Germany's EID Energy Intensive Industry group, including chemicals and steel firms, attacked the plans.

"Politicians want to turn the cap on the renewable energy surcharge into reality by making its most energy-intensive industry shoulder the burden,' said EID spokesman Utz Tillmann.

That branch would have to pay a large part of the planned 700 million euros per year, Tillmann added.

"We need a cost brake that will limit the costs of renewable energy equally for all consumers for the long term," he said.

Altmaier said last week he would try to secure an agreement in March with Germany's 16 federal states, whose support he needs to get a law through the Bundesrat.

So far the SPD and Greens have rejected the plans but a deal may be reached in some areas.

Altmaier also said he was confident he would find a compromise with FDP Economy Minister Philipp Roesler on EU plans to hold back some CO2 permits in an effort to prop up collapsing carbon prices on the EU Emissions Trading Scheme.

The two ministers are at loggerheads, with Altmaier supporting the plans and Roesler rejecting them, arguing that interference in markets is not a good idea.

"We have agreed on common proposals for a power price brake. I am fairly certain we will also succeed in going to Brussels with a joint position in coming weeks," Altmaier told the newspaper.

(${esc.dollar}1 = 0.7487 euros) (Reporting by Alexandra Hudson and Markus Wacket; Writing by Madeline Chambers; editing by Gareth Jones and Jason Neely)

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