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Germany

Germany

ENERGY TAX COULD END DEADLOCK

German utilities are warming to the idea of an energy tax. Pressured by the Electricity Feed Law (EFL), which obliges utilities to buy wind power at a premium price, they are beginning to see that dividends from such a tax could be used to compensate them for the steady growth in payments flowing to wind turbine operaters.

The softening in utility attitudes emerged behind the scenes at the Husum wind energy congress last month. One of the biggest sessions, attracting around 300 delegates, was a major debate on the EFL. All were anxious to know in which direction the thoughts of the major players were moving now that the storm created by the utilities earlier this year, when they tried to undermine the law, has calmed to a stiff breeze.

Claus Möller, Schleswig-Holstein's minister of finance and energy, made it clear that he feels introduction of the EFL was a sensible reaction to the political decision to reduce CO2 emissions in Germany by 25% by the year 2005 compared with levels in 1987. "However this is not to say that there may not be other possible routes to the same end," he added. He insisted that the hardship clause in the EFL should be defined more precisely. This would stop utilities in windy areas moaning about the burden of having to buy wind at EFL rates and give them a means to pass on the costs to the usually much larger utility from which they draw most of their electricity.

Irrespective of Möller's opinion, Bernd Michael Zinow, representing the powerful utilities association, VDEW, stressed that he will continue to work towards having the EFL brought before the Federal Constitutional Court. Meantime, Karl-Heinrich Buhse, chairman of Schleswag utility, demanded: "The necessary subsidies for wind must be provided by the state." Schleswag is the utility most affected by the development of wind energy in Germany.

Notwithstanding this sharp demarcation of battle lines on the congress platform, behind the scenes a new mood of compromise was brewing. It seems that three years is the time span in which both sides hope to have hammered out a solution based on an energy tax. In the compromise being discussed, the EFL would continue in its present form.

Meantime, it looks as though the Federal Ministry for Economic Affairs will recommend that the EFL continues unchanged for another three years. It is currently examining the effects of the law over the first four years of its implementation -- too short a time period, it feels, on which to base major changes.

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