Almunia Calls German Renewable Energy Surcharge Exemptions Difficult But Manageable Issue

Yesterday Competition Commissioner Joaquin Almunia met with German Economics Minister Sigmar Gabriel to discuss the reform of the German Renewable Energy Sources Act (EEG) and the reductions granted to energy-intensive companies on the surcharge promoting renewable energy sources in Germany (“EEG-surcharge”). Mr Almunia called the exemptions a technically difficult, but manageable issue.

In December last year, the European Commission opened an in-depth investigation to examine compliance of the above-mentioned EEG surcharge reduction with EU state aid rules (as well as compliance of the reduction on the EEG-surcharge granted to suppliers that source 50% of their electricity portfolio from domestic renewable electricity (“green electricity privilege”)). At the same time, the Commission also published “Draft Guidelines on environmental and energy State aid for 2014-2020“, which set out the conditions under which state aid measures may be declared compatible with the internal market. The German government defended the EEG exemptions at the time, but announced an overhaul of the entire EEG including the exemptions from the EEG surcharge. A key point paper for an EEG amendment has meanwhile been adopted by the government and a draft bill is available on the internet. While the green electricity privilege shall be deleted as part of the revision, the draft bill does not contain a proposal regarding the EEG surcharge exemptions for large energy consumers in view of the ongoing talks with the Commission as the draft points out.

1. Auctioning

For one, Mr Almunia and Mr Gabriel discussed auctioning of financial support for renewables. According to the proposed new Section 1a (4) EEG, financial support for renewable energy sources and mine gas shall be determined by auctions by 2017 at the latest. To gain experience this shall be preceded by auctions for freestanding plants, the particulars of which shall be set out in an ordinance (cf. new Section 33 EEG).

2. EEG Surcharge Exemptions

Secondly, Mr Almunia and Mr Gabriel talked about the exemptions for energy-intensive companies, which have been vociferously defended by various industry associations in the past weeks that pointed out the danger of plant closures in Germany. Mr Almunia said the aim to reduce CO2 emissions had to be balanced with the needs of the industry. This was a delicate balance, but he was sure, a solution could be found in further talks.

Reportedly, Mr Almunia specified that exemptions could only be justified for certain sectors that were subject to international competition. Allegedly Mr Almunia named certain sectors. However, the sectors mentioned in the media differ slightly. While Stuttgarter Zeitung names chemicals, zinc and aluminum manufacturers, Rheinische Post lists steel, aluminum and zinc.

Regarding the companies that were granted EEG surcharge reductions expected to amount to EUR 5.1 billion in 2014, please see here.

3. Next Steps

Commissioner Almunia announced to present the 2014 to 2020 guideline on environmental and energy state aid in April. Minister Gabriel announced to submit an EEG bill that is in line with EU demands for adoption by the Germany government on 8 April 2014.

Source: BMWi; Stuttgarter Zeitung; RP-Online

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