Reportedly Alternative Proposal to Controversial Climate Levy – Government Decision on 1 July?

Reports are increasing about an alternative proposal for the controversial climate levy. A a number of coal-fired power plants shall allegedly be made part of a pool of back-up power plants, for which the operators would receive a remuneration. The government is to decide on 1 July, various media sources say.

1. Information on New Proposal

The new proposal was reportedly drafted by the trade union IG BCE that heavily opposed the climate levy and the Economics Minister of North Rhine-Westfalia, where a large number of coal-fired power plants are located.

From the information that has emerged it appears that

  • Old coal-fired power plants with a capacity of at least 2.7 GW shall be made back-up power plants. Operators shall receive a remuneration. According to Frankfurter Allgemeine Zeitung (FAZ) payments would be in the mid to upper triple-digit million range. This way at least 12.5 million tonnes of CO2 shall be saved.
  • In addition 4 million tonnes of CO2 shall be saved by shutting down old coal-fired CHP plants and promoting new presently unprofitable gas-fired CHP plants (for examples, see here). As FAZ points out financial support for CHP plants would have to be increased from EUR 500 million per year to EUR 1.5 million, driving up the CHP surcharge for consumers from 0.25 ct/kWh to 0.75 ct/kWh.
  • To reach the government’s goal of reducing CO2 emissions by 22 million tonnes by 2020, additional measures to promote energy efficiency shall be introduced for example for the exchange of heating systems that are older than 15 years. Costs would in the range of EUR 1.5 million the media sources say.

2. Climate Levy

According to the news programme Tagesschau, Minister Gabriel defended the climate levy, calling it an efficient and cost-effective  way to reduce CO2.

To reach the government’s goal of reducing greenhouse gas emissions by 40% by 2020, the government adopted its “Action Programme on Climate Protection 2020″ (Climate Programme 2020) in December 2014. The measures proposed included the obligation of the German power fleet to reduce an extra 22 million tonnes of CO2 by 2020.

In March 2015 a key point paper was presented that outlined how the reduction should be implemented. It was met with strong opposition as it affected mainly older coal-fired power plants and there were strong legal concerns about the way the government wanted to proceed concerning not only German, but also European law (for more information, please see here).

In May 2015 the government proposed to reduce the burden for conventional power plant owners to extra CO2 savings of 16 million tonnes by 2020. Yet there was still opposition and the legal concerns also remained.

3. Other Energiewende Issues to Be Discussed on 1 July

Another contentious topic in the recent past has been grid expansion, in particular due to opposition against two of the three new power line corridors (for more information, please see here) which link Northern Germany with Bavaria where four nuclear power plants will be shut down until 2022 (for more information, please see here).

Reportedly Energy Minister Sigmar Gabriel will present a compromise regarding the power lines to Bavarian premier Horst Seehofer on 1 July. From what FAZ reports it looks as if Minister Gabriel will suggest to use existing power pylons for the so-called Corridor D or Gleichstrompassage Süd-Ost project or lay underground cables. According to FAZ, Minister Gabriel insists on a new power line to Grafenrheinfeld in Bavaria where E.ON recently announced to close its nuclear power plant 7 months before the closure will be due under the German nuclear power exit decision. Yet the Energy Ministry does not seem to consider two other power line projects leading into Bavaria necessary anymore.

Sources: Die Welt; Tagesschau; Frankfurter Allgemeine Zeitung, 25 June 2015, page 15

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