Library filed under Taxes & Subsidies from Germany
Electricity prices in Germany are already among the highest in the world. The price of industrial electricity has risen about 37 percent since 2005, according to the Federation of German Industries. The price in the United States has fallen by 4 percent over about the same time. The rise in energy prices has already cost Germany $52 billion in net exports and could prove even more damaging if steps are not taken to keep prices in check.
In their annual report, Harhoff and his colleagues have called for the abolition of the EEG altogether. They concluded that the promotion of renewable energy makes electricity more expensive, and doesn't even lead to enhanced climate protection or more innovation. ...The EEG hinders innovation because the risk of investing in new technologies is not rewarded by the market.
Germany should scrap its clean-energy subsidies because the system has driven up electricity costs for consumers and hasn’t spurred innovation or reduced greenhouse gases, a group of government advisers said. The uncapped aid provided by the system known as EEG "isn’t a cost-efficient instrument for climate protection nor does it have a measurable impact on innovation,” the commission said in the report. “That’s why there is no basis for the continuation of the EEG.”
Currently, public support for Energiewende is still high but the rising cost has become a growing concern, and last month the new energy minister, Sigmar Gabriel, vowed to cut subsidies for wind, solar and other renewables ...Unless the new government manages to reconcile national priorities with the dynamics of its federal system, the mood could quickly turn against Germany's green revolution.
While surveys have shown that a majority of the German public does support renewable energy, there is mounting frustration with the way the government has gone about realising the Energiewende. The cost of renewable subsidies is high, ranging from €22 to 24 billion, according to Gabriel.
Merkel’s Cabinet backed proposals to charge operators of new clean-energy plants 70 percent of the so-called EEG-Umlage, a fee paid by power consumers that they’re currently exempt from, according to an economy ministry document. That would translate into 4.4 euro cents (6 cents) a kilowatt-hour.
Germany's economy minister wants to cut the support price paid for electricity from solar and wind power generators by about a third by 2015 ...Europe's biggest economy is in the throes of shifting away from nuclear and fossil fuel-powered generation to so-called renewable sources, but the move has sent electricity costs for consumers soaring.
Hundreds of German companies have been largely exempt from a surcharge on electricity bills used to promote renewable energy sources such as solar and wind, which other consumers pay.
Before Germany’s big shift to renewable energy, electricity for industry was produced where it was needed; near the manufacturing heartlands of the Ruhr and greater Stuttgart. But now that nuclear reactors are being switched off, and renewables are taking priority over energy generated from fossil fuels, the country’s energy is being generated a long way from its heavy industry.
Angela Merkel, the German chancellor, has declared that reforming Germany’s transition to renewable energy is a key priority of the incoming government. “Above all we must curb the explosion in costs of renewable energy subsidies. One of the first major projects of the new federal government will be an amendment to the renewable energy legislation,” Ms Merkel said in her weekly podcast.
BASF (BASFn.DE) chief executive Kurt Bock said German jobs could be lost if the chemicals giant has to start paying electricity grid fees to shift the burden of funding a renewable energy infrastructure to large companies. "If politicians burden us with such a fee, then there is a danger that production will be transferred somewhere else."
A leading Social Democrat warned on Wednesday that the European Union planned to investigate German renewable energy discounts for industry, a move that could end up hitting a raft of companies operating in Europe's biggest economy.
Before the Obama Administration marches America to renewable-energy nirvana, it may want to inspect what success looks like in Europe. The Continent is much closer than the U.S. to realizing its dream of replacing carbon energy sources with wind and solar, and the dream is starting to look like a nightmare.
Consumers are less willing to foot the whole bill for policies to mitigate global warming. The shift in the debate is most conspicuous in Germany, where the Energiewende – Chancellor Angela Merkel’s historic drive wind and solar – has left German consumers with among the highest prices for electricity in Europe. The German environment ministry says the total cost of the Energiewende could reach about €1tn.
The German chancellor's experiment to wean Europe's biggest economy off nuclear and fossil fuels and push it into renewables is at risk because generous subsidies have proved so popular with investors in green power that the country is straining under the cost. ...The offshore wind industry, in particular, is clamouring for continued support as its expansion has proven more costly than expected.
Last year, wind, solar and other nonfossil-fuel sources provided 22 percent of the power for Germany, but the country increased its carbon emissions over 2011 as oil- and coal-burning power plants had to close gaps in the evolving system ...Germany's power grid has been strained by new wind and solar projects on land, compelling the government to invest up to $27 billion over the next decade to build roughly 1,700 miles of high-capacity power lines and to upgrade lines.
Generous state incentives for solar, wind and biogas have driven up prices, which are now among Europe's highest and set to rise 20 percent more next year, topping 1,000 euros annually for the average three-person household. ...But Steinbrueck charged that "the management of this energy transition is a disaster ... it is the biggest brake on investment we have."
It is only gradually becoming apparent how the renewable energy subsidies redistribute money from the poor to the more affluent, like when someone living in small rental apartment subsidizes a homeowner's roof-mounted solar panels through his electricity bill. The SPD, which sees itself as the party of the working class, long ignored this regressive aspect of the system.
At least one green energy developer recognizes that these stimulus subsidy programs have a record of doing more harm than good, and he isn't reluctant to say why. Patrick Jenevein, CEO of the Dallas-based Tang Energy Group, posted a Wall Street Journal article arguing that "the sequester offers Washington a rare opportunity to roll back misguided subsidies and maybe help reverse wind power's stalling momentum."
Under the law, German electricity users pay a charge that goes towards funding renewable energy generation. Competition Commissioner Joaquin Almunia believes that exemptions granted to some energy-intensive German companies from those charges run counter to EU law. The Commission plans to launch proceedings and also require companies to repay the charges they were exempted from in the past.