Germany to Freeze Subsidies

To offset the cost of Germany’s shift from nuclear power to renewable energy, the government reported plans to cap rising household electricity prices and to compel industry to foot a larger part of the transition’s bill, the Wall Street Journal reported.

The government will propose legislation, which could see passage by August, to “freeze subsidies to renewable-power producers at current levels until the end of 2014,” Environment Minister Peter Altmaier, a senior ally of Chancellor Angela Merkel, told the Journal. Then increases would be held at 2.5% per year.

Leveraging mass opinion in the wake of the Fukushima nuclear-power disaster in Japan, Merkel won the support of the German people in 2010 when she ordered the closures of several nuclear power stations, while also setting a timeline for the total phase out of nuclear power usage in Germany.

A surcharge on household electricity bills has partly financed Germany’s move to alternative energy, the Journal reports. The surcharge steadily rose under Merkel, then shot up sharply this month to 5.3 euro cents per kilowatt-hour from 3.6 cents previously.

And with national elections coming this fall, Merkel’s Christian Democrats and pro-business Free Democrats coalition is concerned that consumers will vote for change if they are forced to continue financing the bulk of the shift to renewable energy.

“It is not acceptable that electricity consumers should keep bearing all the risk of the future costs on their own,” Mr. Altmaier was quoted as saying at a news conference held this past Monday.

The proposed legislation marks a change in position for Merkel in the face of rival alliance between the Social Democrats and Greens, which has long called for industry to assume a greater share of the financial burden of the transition, analysts said in the Journal article.

To read the original Wall Street Journal article cited in this story, click here

Tags: Policy

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