15.07.2013
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Energy policy

EU to clamp down on German industry exemptions

Over the weekend, media reports poured in about the EU going against German industry exemptions to cover the cost of renewables. Consumers should be happy, and though industry will complain, it remains to be seen whether revoking these exemptions will make power more expensive for them in light of the plummeting prices on the power exchange.

Once again, international onlookers have their work cut out for them, and the German press is not always helping. The German news weekly Focus published an article yesterday entitled "EEG [the German Renewable Energy Act] violates European competition law" with the subtitle "Brussels puts an end to German power policy." In fact, Brussels is investigating the matter – and the matter is not the EEG as a whole, but rather industry exemptions.

On Wednesday, Brussels plans to open proceedings against Germany to ban all industry exemptions, and the firms could even be required to pay retroactively for exemptions from previous years. [UPDATE: Apparently, the original report in Der Spiegel was inaccurate; Brussels announced on Tuesday that no decision was expected until the fall.] It is good news for consumers, who have been cross subsidizing industry for years. Roughly 20 percent of power consumption in Germany (the share that energy-industry consumes) is largely exempt from the surcharge, so the remaining surcharge passed on to other ratepayers (most businesses and all households) is around 25 percent higher as a result.

Under Chancellor Merkel, the policy has been expanded to include a large number of firms that cannot possibly leave the country because of power prices, including not only a number of municipal transportation providers, but also brown coal mining firm Vattenfall Mining (if you want the brown coal in Germany, you have to dig it up where it is).

Obviously, the industries affected will complain, and we will probably have more claims about the Energiewende scaring away German industry. But these industry exemptions were created (by the SPD/Green coalition under Chancellor Schroeder) in order to protect industry from rising power prices; power prices are falling on the exchange, however – by 12.6 percent in the first half of 2013 after nearly a 20 percent drop in 2012. The justification for industry exemptions – higher industry power prices – thus does not exist.

Only a few weeks ago, the EU's Energy Commissioner Günther Oettinger (himself a German, and click here to read about his history opposing renewables as Governor of Baden-Württemberg) announced that the EU might also go against yet another industry exemption, this time for grid fees. In March, news of a possible investigation was first made public.

As the report in Focus adds, Oettinger is even interested in going after the EEG itself. He has allegedly stated that Germany cannot legally promote its own wind power but not pay for wind power imported from Denmark and Norway. Here, Oettinger seems surprisingly unaware of EU policy, which in fact requires member states to have a target for renewables. Furthermore, the EU ruled a decade ago that feed-in tariffs – the policy mechanism in the EEG – do not constitute state aid because they do not discriminate against specific firms, all of which are treated equally, but rather against specific sources of energy – as required by EU law.

Nonetheless, something seems to be afoot in Brussels, for the EU also ruled on Friday that French feed-in tariffs for wind power violate EU law, apparently because of a technicality. More on that later… (Craig Morris)

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2 Comments on "EU to clamp down on German industry exemptions "

  1. Karl-Friedrich Lenz - 16.07.2013, 08:25 Uhr (Report comment)

    SPIEGEL has published an update: There will be no decision on starting a procedure before the end of the summer break (end of August).
    http://www.spiegel.de/wirtschaft/soziales/eu-entscheidet-nach-sommerpause-ueber-eeg-verfahren-gegen-deutschland-a-911191.html

  2. heinbloed - 15.07.2013, 12:24 Uhr (Report comment)

    Oettinger, claiming Germany isn't buying windpower from neighbouring countries, doesn't know what he is talking about. What is frequently the case. They got rid of him in Germany sice what he said in public during his political career there made no sense to the public, endangering CDU politics....
    Denmark is exporting wind power to Germany since many years. And German utilities buy it since it is worth it. Even Sweden exports now and then windpower to Germany, for money. And Norway exports electricity as well, being a top exporter of green (hydro-)electricity to Germany. Demand for Norwegian power in Germany is so huge that 2 sea-cables are being constructed called "NORGER":

    http://www.ftd.de/unternehmen/industrie/:doppeltes-seekabel-norwegen-zieht-kabel-fuer-oekostrom-nach-deutschland/70053345.html

    About the project:

    http://de.wikipedia.org/wiki/NorGer

    The already existing NORNED cable to the Netherlands can be used as well to import electricity from Norway to Germany. But it is frequently used to supply the British isles, more profit being made by this way. So much of a profit that a new cable from Norway to the UK/Scotland is being build:

    http://www.gtai.de/wwwroot/archiv-online-news/www.gtai.de/DE/Content/Online-news/2011/09/s2,hauptbeitrag%3D219600,layoutVariant%3DStandard,sourcetype%3DSE,templateId%3Drender.html
    See chart 1 In chart 2 we see how little wind power is generated in Norway, less than 1 % of the totally generated power. There is none for export! You can see now why Oettinger had to leave Germany ....:)

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