Germany electricity price revamp unlikely before election – VCI

21 March 2013 16:58  [Source: ICIS news]

LONDON (ICIS)--Germany is not likely to implement major reforms to its electricity pricing system before September’s federal election, despite a big political energy summit headed by Chancellor Angela Merkel in Berlin on Thursday, the country’s chemical producers group VCI said.

German federal and state leaders are meeting to address rising electricity costs, and in particular to discuss a proposed cap on a surcharge – called “EEG Umlage” – which electricity consumers have to pay to help finance the development of renewable energies.

VCI has been critical of the proposals to cap EEG as such a cap may be financed, at least in part, by eliminating or reducing exemptions from the surcharge energy-intensive industrial producers such as chemicals have under current rules - thus further driving up their energy costs and hurting their international competitiveness.

However, VCI said that it was not likely that major reforms would be agreed during the summit.

Instead Merkel and the states will likely opt for an interim solution, with a major overhaul of the EEG system coming only after the election, VCI said, citing discussions it had this week with members of parliament (Bundestag) from Germany’s five main political parties.

Importantly, the politicians indicated to VCI that Germany-based energy-intensive industrial producers needed continued exemptions from electricity surcharges in order to maintain their competitiveness, the group said.

Even Gregor Gysi, who leads leftist opposition party Die Linke in the Bundestag, acknowledged chemical production as a pillar of Germany’s industrial base, VCI noted.

It would have been a big mistake had Germany bet on finance and banking to drive its economy, as it would have gone down the road of deindustrialisation, as happened in England and Cyprus, Gysi told VCI.

However, in a separate media briefing earlier on Thursday, Hannelore Kraft, who heads the government of Germany’s heavily industrialised North Rhine-Westphalia state, said that an elimination or reduction of the exemptions was on the agenda of the Berlin summit. The state is home to many chemical producers, including Bayer.

Kraft is a member of the opposition Social Democrats, who hope to oust Merkel’s conservative-liberal coalition government in September.

By: Stefan Baumgarten
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