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Minister ‘puts brakes’ on German energy switch

German Environment Minister Peter Altmaier came under fire Friday for controversial plans to put limits on Germany’s rapid extension of renewable energy sources - a key part of the country’s strategy to phase out nuclear energy by 2020.

Published: 12 October 2012 12:53 CEST

Minister 'puts brakes' on German energy switch

Photo: DPA

Minister Altmaier said on Thursday that something must be done to take the financial burden off German consumers, who will be expected to pay a higher levy on their electricity bills from next year, because of the transition to renewables. To do this, Altmaier suggested a complete overhaul of the Renewable Energy Sources Act (EEG).

Furthermore, said the minister, the current rate of growth in wind energy and biogas power plants had to be made “constant and reliable” and suggested placing limits on the number of plants allowed to be built in certain areas, similar to those placed on solar power.

According to Altmaier, in some places local authorities are planning new wind and biogas facilities that will provide 60 percent more energy than what is needed.

Although Altmaier promised to stick to the target of getting 80 percent of Germany’s energy from renewable sources by 2050, opposition politicians and some states have accused the minister of putting a “brake” on the government’s ambitious plan.

Without going into detail, the minister suggested tighter controls be put in place to regulate how many and which type of facilities can be built in which areas. Renewable energy facilities should also be planned to coincide with areas where the grid is capable of taking up the electricity.

The most controversial part of this, wrote Die Welt daily newspaper on Friday, is likely to be whether the states are willing to give up their own renewable energy targets, not to mention the revenue from taxes paid on new wind parks and biogas plants.

On Friday, several opposition politicians and representatives from Schleswig-Holstein – which is currently planning a large scale extension of its wind capacity – criticised the suggested reforms as sending a “wrong signal.”

The head of the Social Democratic Party (SPD) faction Ulrich Kelber accused the government of serving lobbyists in the energy industry, whereas Left party chairwoman Katja Kipping described Altmaier’s suggestions as “falling at the feet of the energy companies.”

Even the CDU’s governing coalition partner the liberal Free Democrats (FDP) criticised the lack of concrete plans for reducing energy prices for consumers, an issue which the FDP says the CDU does not take seriously enough.

In recent weeks criticism has been mounting against government energy policy after it was revealed that the current rules exempt bigger firms from paying the renewable energy levy – at the cost of small businesses and consumers.

Industry is getting “discounts that everyone else has to shoulder,” head of Friends of the Earth Germany (BUND) Hubert Weiger told the paper.

The Local/DAPD/jlb

Related Topics
POLITICS ENERGY FDP GREEN BERLIN CDU ALTMAIER

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Output is expected to expand 0.3 percent this year, the economy ministry said, up from a prediction of 0.2 percent in February.

The slightly rosier picture comes after improvements in key indicators — from factory output to business activity — boosted hopes a recovery may be getting under way.

The German economy shrank slightly last year, hit by soaring inflation, a manufacturing slowdown and weakness in trading partners, and has acted as a major drag on the 20-nation eurozone.

But releasing its latest projections, the economy ministry said in a statement there were growing indications of a “turning point”.

“Signs of an economic upturn have increased significantly, especially in recent weeks,” Economy Minister Robert Habeck said at a press conference.

The ministry also cut its forecast for inflation this year to 2.4 percent, from a previous prediction of 2.8 percent, and sees the figure falling below two percent next year.

“The fall in inflation will lead to consumer demand — people have more money in their wallets again, and will spend this money,” said Habeck.

“So purchasing power is increasing, real wages are rising and this will contribute to a domestic economic recovery.”

Energy prices — which surged after Russia’s 2022 invasion of Ukraine — had also fallen and supply chain woes had eased, he added.

Several months ago there had been expectations of a strong rebound in 2024, with forecasts of growth above one percent, but these were dialled back at the start of the year as the economy continued to languish.

‘Germany has fallen behind’

But improving signs have fuelled hopes the lumbering economy — while not about to break into a sprint — may at least be getting back on its feet.

On Wednesday a closely-watched survey from the Ifo institute showed business sentiment rising for a third consecutive month in April, and more strongly than expected.

A key purchasing managers’ index survey this week showed that business activity in Germany had picked up.

And last week the central bank, the Bundesbank, forecast the economy would expand slightly in the first quarter, dodging a recession, after earlier predicting a contraction.

German Economics Minister Robert Habeck

Economics Minister Robert Habeck (Greens) presents the latest economic forecasts at a press conference in Berlin on Wednesday, April 24th. Photo: picture alliance/dpa | Michael Kappeler

Despite the economy’s improving prospects, growth of 0.3 percent is still slower than other developed economies and below past rates, and officials fret it is unlikely to pick up fast in the years ahead.

Habeck has repeatedly stressed solutions are needed for deep-rooted problems facing Germany, from an ageing population to labour shortages and a transition towards greener industries that is moving too slowly.

“Germany has fallen behind other countries in terms of competitiveness,” he said. “We still have a lot to do — we have to roll up our sleeves.”

Already facing turbulence from pandemic-related supply chain woes, the German economy’s problems deepened dramatically when Russia invaded Ukraine and slashed supplies of gas, hitting the country’s crucial manufacturers hard.

While the energy shock has faded, continued weakness in trading partners such as China, widespread strikes in recent months and higher eurozone interest rates have all prolonged the pain.

The European Central Bank has signalled it could start cutting borrowing costs in June, which would boost the eurozone.

But Habeck stressed that care was still needed as, despite the expectations of imminent easing, “tight monetary policy has not yet been lifted.”

In addition, disagreements in Chancellor Olaf Scholz’s three-party ruling coalition are hindering efforts to reignite growth, critics say.

This week the pro-business FDP party, a coalition partner, faced an angry backlash from Scholz’s SPD when it presented a 12-point plan for an “economic turnaround”, including deep cuts to state benefits.

Christian Lindner, the fiscally hawkish FDP finance minister, welcomed signs of “stabilisation” in the economic forecasts but stressed that projected medium-term growth was “too low to sustainably finance our state”.

“There are no arguments for postponing the economic turnaround,” he added.