German government to push through energy policy reform

Industry Minister Gabriel is sticking to his plans to have amendments to the country’s Renewable Energy Act finalized at the beginning of June. His critics charge that he is trying to get around the democratic debate.

King and Queen Coal: Sigmar Gabriel and his party collegue Hannelore Kraft, both Social Democrats, are known to be supporters of coal.

King and Queen Coal: Industry Minister Sigmar Gabriel and his party collegue Hannelore Kraft, both Social Democrats, are known to be supporters of coal industry. Gabriel has been denouncing the Energiewende as too expensive for consumers to gather support for his policy reforms – but done little to make sure that falling wholesale electricity prices trickle down to consumers. (Photo by Moritz Kosinsky / Wikipedia)

It is a bit strange when you think about it – just a few weeks ago, there was widespread agreement that Minister Gabriel got his way in the conflict between Berlin and Brussels. The European Commission wanted Germany to rein in its industry exemptions to payments for renewable electricity, but Berlin wanted to defend these subsidies. One German blogger even documented (in German) the government’s own surprise at the ease with which it got what it wanted.

Now, Gabriel says he is running out of time. If he does not start coordinating the new amendments with Brussels, they might not become law in August, and the result would be that German industry would have to pay the renewables surcharge in full (they are currently partly exempt) on January 1.

The two outcomes seem unlikely. If Gabriel got his way in April, why is he suddenly under such pressure now?

The renewables community seems to believe that the Minister does not want to listen to any further proposals from, for instance, Germany’s 16 states. They submitted a request for 89 changes, 84 of which have already been rejected. The rejection letter came not from Gabriel, but from Undersecretary Rainer Baake, who says the requested changes would either cost too much or conflict with EU law. Last year’s winner of the German Solar Prize, Erhard Renz, now states in his blog that “Gabriel has to go.”

Perhaps the best blog post in English on the subject written by a German – albeit one living in Japan – is from Karl-Friedrich Lenz. A legal expert, Lenz accuses the EU of doing “serious damage to the German democratic process,” adding that, “If Gabriel gets his way the constitutional rights of the Bundesrat will be massively curtailed.”

One thing that Renz and Lenz agree on is what the proper response to Gabriel’s threat to end industry subsidies: “who cares.” Both of them point back to the European Court of Justice’s decision that feed-in tariffs do not constitute “illegal state aid” (essentially, what the EU calls subsidies that are incompatible with the single market). Now, the EU is looking into the legality of these industry exemptions to the surcharges that cover the cost of the feed-in tariffs; these exemptions are subsidies that distort competition between member states. Gabriel is now threatening Germany with what Brussels originally threatened: no more cross-subsidies for German industry from German ratepayers.

Here, we have perhaps the most ironic part of the story. I have maintained all along that Brussels is not interested in reducing industry subsidies, but merely in preventing conflicts between member states. In fact, I bet Brussels would actually try to stop Germany from completely revoking these exemptions so quickly. The obvious outcome would be a worsening of the investment environment in the EU’s biggest economy. Are we really supposed to believe either Brussels or Berlin would allow that?

Craig Morris (@PPchef) is the lead author of German Energy Transition. He directs Petite Planète and writes every workday for Renewables International.


Craig Morris (@PPchef) is co-author of Energy Democracy, the first history of Germany’s Energiewende.

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