Germany's chems, biofuels welcome Merkel coalition pact

27 October 2009 15:01  [Source: ICIS news]

TORONTO (ICIS news)--Germany’s coalition agreement between Chancellor Angela Merkel’s Christian Democrats and the pro-business Free Democrats offers support for the country’s chemicals and biofuels industries, trade groups said on Tuesday.

Frankfurt-based chemical producers association Verband der Chemischen Industrie (VCI) said the coalition pact had set necessary signals to strengthen Germany as a site for industrial production.

VCI general manager Utz Tillman pointed in particular to the new government’s commitment to promote the development of nanotechnology, as well as tax measures and relief to support investment in research and development.

But he also said that the government was still facing major challenges to put in place conditions for sustainable growth following the economic crisis.

Two biofuels trade groups – VDB and BDB – welcomed the coalition’s commitment to introducing gasoline with 10% ethanol content (E10) and measures to revive the market for 100% biodiesel (B100).

VDB general manager Elmar Bauman said that the policies announced by Merkel's new coalition government offered Germany’s biofuels firms a more promising outlook after producers suffered in the wake of the tax measures by her previous coalition government with the Social Democrats.

Also important was an agreement on sustainability rules for Germany-based biofuels production, which stipulated that bioethanol and biodiesel would need to emit at least 35% less carbon dioxide than fossil fuels, he said.

The main beneficiaries of the agreement included Germany’s agricultural sector, which supplies the energy crops to feed Germany’s biofuels plants, he added.

Michael Vassiliadis, the head of Germany’s chemicals and energy union IG BCE, said the coalition pact still left many questions open.

“Critical decisions have been put off and much remains unclear,” he said, adding that this could create uncertainty among workers and companies.

One key uncertainty was that it remained unclear if the coalition government would continue to extend subsidised short-time working schemes into the New Year, he said.

The schemes, which have been widely used by chemicals producers, had enabled firms to retain staff and avoid lay-offs during the crisis.

In addition, Vassiliadis said the coalition was making “vague promises” to cut taxes, but had left open the question of how it planned to consolidate its finances.

But Vassiliadis, who had earlier voiced concerns about plans by the Free Democrats to cut back workers’ rights, noted that the coalition agreement did not curb worker representation on companies’ supervisory boards or unions' rights in the collective bargaining process.

He also welcomed steps to pay for additional social security expenses in 2009 and 2010 out of general tax revenues, rather than through additional social security levies, which would have burdened both firms and workers.

Germany has incurred additional social security expenses as a consequence of the economic crisis.

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