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Germany

Germany

Coal again gets massive backing

Coal has been declared the most unpopular energy source in Germany, but in a new law passed by parliament at the end of April, DEM 7.5 billion was granted to subsidise its production in 1996, with a further DEM 7 billion annually in each of the following four years. In contrast the same piece of legislation gave little more than token recognition to renewables, voted one of the country's most popular sources of energy (Windpower Monthly, May 1994), only making small changes to existing market stimulation measures. These will cost the government no more than DEM 10-20 million.

Dubbed the Article Law, because it consists of one new law and amendments to two other laws, this coal/nuclear/renewable energy legislation secures the use of German hard coal in electricity production from 1996-2005. Of the two laws amended, only the Electricity Feed Law is relevant to renewables. It has now been expanded to include a new renewable -- wood waste from wood processing plant -- and payment for electricity from several renewables has also been improved, including that for small hydro (under 5 MW). Wind payments, however, were not increased, even though lobbyists had argued strongly for better kilowatt hour rates for inland areas, where winds are low, and for utilities to pay for some of the costs of connecting wind plant to the grid.

A third change to the feed law, however, is of benefit to wind and other renewables plant owners because it reduces their electricity bills. At the moment the portion of electricity generated and consumed from privately operated plant over 1 MW is subject to a 8.5% levy (the Kohlepfennig), an energy tax to pay for coal. When the new law comes into force, the tax will only be levied on plant over 5 MW.

Before the new law can come into force, it must also go through the upper house of parliament at the end of May. In the unlikely event that a two-thirds majority rejects the legislation, it will be returned to the lower house, where there again has to be a two-thirds majority before the bill can pass into law.

Apparently shamed by its shoddy treatment of renewables, parliament did go on to pass a resolution for a limited programme of capital subsidy payments for renewables plant up to 5 MW. However, the size of the programme remains unspecified, with the Federal Finance Ministry allowed the final say. It seems likely it will at least be the size of a proposal put forward by Economy Minister Günter Rexrodt for a four year renewables market introduction programme with a budget of DEM 25 million. This is regarded as ridiculously small by wind lobbyists.

Interestingly, the programme resolution has a strong export-oriented tone: "Renewable energies including biomass can help to improve the energy supply situation in developing countries. For this it is necessary, however, that the technology is developed and improved at home. This corresponds with the stand taken by the federal government towards the developing countries at the Climate Conference in Rio de Janeiro. "

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