New German Goverment Scales Back Renewables Policy

  • Date: 16/12/13
  • Stefan Nicola, Bloomberg

Chancellor Angela Merkel’s new cabinet sends a message on her priorities for the biggest shift to clean-energy of any developed country: Nurturing Germany’s economy takes precedence over the drive to renewables. The two parties also agreed to scale back support for sea-based and onshore wind power.

Merkel’s bloc and the Social Democrats said yesterday they’ll move responsibility for energy policy to the Economy Ministry from the Environment Ministry, put under the control of SPD leader Sigmar Gabriel. He will lead an overhaul of Germany’s EEG clean-energy law to help tame the second-highest electricity prices in the European Union after Denmark’s.

In doing so, “the government is shifting the main focus toward ensuring that the competitiveness of the German economy isn’t compromised by the energy switch,” Famke Krumbmuller, an energy-policy analyst at the Eurasia Foundation, a London-based policy adviser, said in an interview. “The fine-tuning of this massive reform is going to happen in one ministry, and the clear focus will be competitiveness and reducing costs.”

The decision sheds light on how Merkel will execute her 550 billion-euro ($756 billion) program to shut down Germany’s nuclear power plants and move Europe’s biggest economy toward renewables. Merkel has said the energy overhaul is the main priority for her third term after rising costs of wind and solar installations sent consumer electricity bills soaring.

Germany was until two years ago the world’s biggest market for solar technology, bolstered by above-market rates paid for power from low-carbon sources. Gabriel’s job now is to balance efforts to rein in electricity costs with Merkel’s decision to close all nuclear plants by 2022.

Dirty Coal

Merkel had to make deals with the SPD to form a government, including a commitment to use lignite, one of the most polluting energy sources, to bridge the gap in the energy mix. The two sides also agreed to scale back support for sea-based and onshore wind power.

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