Germany's chemical union rejects EU move for earlier coal review

15 September 2010 19:33  [Source: ICIS news]

TORONTO (ICIS)--Germany’s chemical and energy union IG BCE on Wednesday rejected an EU proposal to bring forward a review of the planned phase-out of the country's subsidised hard coal production to 2010 from 2012.

Changes in the schedule for the phase-out would directly affect specialty chemicals major Evonik as proceeds from the sale of Evonik are meant to cover environmental costs associated with the closure of coal mines, located mainly in Germany’s largest state, North Rhine-Westphalia.

Under a 2007 coal compromise between German energy firms, union and federal and state governments, the country plans to phase out subsidised hard coal production by 2018, with a review set for 2012.

The EU wants a phase-out by 2014, and this week EU energy commissioner Gunther Oettinger proposed that Germany bring its review forward to 2010.

Chemical union head Michael Vassiliadis said the Oettinger's proposal for an early review was not helpful and incomprehensible.

German industry investment plans in energy and related sectors were based on the schedule laid down in the 2007 agreement and subsequent legislation, he said.

“We expect all parties to abide by the [2007] agreement,” Vassiliadis said.

Vassiliadis had warned earlier that ending subsidised coal production four years ahead of schedule could precipitate divestments and hit employment at Evonik, which has a staff of some 40,000.

Germany’s Chancellor Angela Merkel has she wanted all parties to stick to the 2007 agreement.

However, German commentators said Merkel may yet welcome an early phase-out as it could save the government estimated subsidy payments of €5.0bn ($6.5bn) at a time when it is seeking to cut deficits and reduce debts.

Evonik is majority owned by RAG-Stiftung, a coal foundation charged with overseeing the coal phase-out. Private equity firm CVC owns a 25.01% minority stake in Evonik which it bought in 2008 for €2.4bn.

($1 = €0.77)

For more on Evonik and other producers visit ICIS company intelligence
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By: Stefan Baumgarten
+1 713 525 2653



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