Government Adopts Energy Concept

The German Government today adopted its new Energy Concept for the period until 2050.  The final concept has been slightly modified compared to the draft from 7 September. Changes relate to various areas, including the introduction of a market transparency office, toning down the 2050 energy efficiency goals for buildings, or CO2 emission targets for cars.

In line with the previous draft, in 2020 renewables shall account for 18% of gross final energy consumption (Bruttoendenergieverbrauch). This shall increase to 60% in 2050.

The renewable energy section contains changes for rather specific items. The 2012 amendment of the EEG shall now strenghten “market and network integration”. For onshore wind, changes cover nature protection, participation of municipalities, improved compatibility of wind turbines and radar equipment, or a register of existing installations. The CCS part received some attention to ensure the continued use of coal, including lignite.

As expected, the government continues to consider nuclear energy a necessary “bridging technology” that helps to stabilize energy prices. The extension of the operating times of the 17 German nuclear power plants for an average of 12 years remains unchanged. Nuclear power plants that started operating in or before 1980 will get an additional 8 years, newer plants will get an extension of 14 years.

The Energy Concept does not address details of how the additional profits for the nuclear power plant operators shall be skimmed off. Instead, this is left to a nuclear fuel rod tax, together with a contractual arrangement with the operators. The government reportedly plans to skim off roughly EUR 30 billion of the additional profits of the nuclear power operators. Close to half of the sum shall be used to consolidate the budget and for the rehabilitation of the former salt mine Asse in Lower-Saxony, where nuclear waste is currently stored. The rest shall be used to promote renewable energy. The utilities shall pay a nuclear fuel rod tax of EUR 2.3 billion from 2011 to 2016.

The decision to extend nuclear power, the most controversially discussed aspect of the Energy Concept of the past weeks, has again been heavily criticized by the opposition and environmental groups, many of whom announced to bring legal action against the extension. It its disputed whether the Federal Council, the legislative body that represents the sixteen Länder (Federal States) on the federal level, needs to consent to the extension. In the Federal Council, the ruling coalition government does not hold a majority. It is likely that the Federal Constitutional Court in Karlsruhe will have to decide the matter.

The nuclear energy and fossil fuels section of the final Energy Concept contains a new part dealing with “strengthening competitive structures”. To this end, an improved permanent monitoring system of market activities shal be introduced. More specifically, a new “Market Transparency Office” (Markttransparenzstelle) located with the Cartel Office shall be created.

Another main focus of the Energy Concept is on the energy savings potential of buildings, as commercial and residential buildings account for 40% of the energy consumption. Instead of using coercive means like tax disadvantages, which the draft Energy Concept announced, the government now wants to trigger a massive energy-efficient renovation program by giving incentives. The “climate neutral” requirement for buildings by 2050 has been toned down to an energy efficiency reduction target of 80%. Exact requirements and financial details remain controversial and will have to be decided during the respective legislative process. For 2011, figures range from EUR 950 to EUR 3 billion per year, Handelsblatt and other papers write.

While the draft Energy Concept intended to lower CO2 emissions for new cars from 160 g/km to 35 g/km by 2040, the final concept refrains from giving specific figures, but refers to further developing EU requirements.

Sources: Energy Concept; Federal GovernmentHandelsblatt, Spiegel, OpenReport

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