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Germany's Eco Levy Falls Under Reform Spotlight

by Ulrika Lomas, Tax-News.com, Brussels

15 October 2012


Amid fears that a significant rise in the country’s renewable energy levy (EEG-Umlage) in 2013 will drive electricity prices in Germany even higher, Germany’s Environment Minister Peter Altmaier has announced plans to radically reform the applicable law (EEG).

Designed to promote renewable energy, the levy is expected to rise under government plans to 5.3 cents per kilowatt hour next year, from 3.59 cents currently, a move which will see many households paying over EUR60 (USD77.80) a year more for the promotion of renewable energy.

Unveiling details of his plans, Environment Minister Altmaier insisted that a fundamental overhaul of the EEG is unavoidable, particularly given soaring electricity prices. Until now, the focus has been exclusively on the quantitative expansion of renewable energy in Germany, the minister added, highlighting the fact that neither regional nor qualitative aspects have been taken into consideration.

Altmaier’s announcement follows mounting criticism of the Christian Democratic Union (CDU) party’s inaction, both from coalition partner the ruling Free Democratic Party (FDP) and from the Green Party.

FDP leader Philipp Rösler recently denounced the CDU’s apathy and hesitation, warning that in order to gain a handle on electricity prices in the long-term the coalition must radically reform the renewable energy law. The EEG is the key cost driver as regards electricity prices, Rösler insisted, underlining the need to address the issue swiftly. The minister lamented the CDU’s lack of courage and its failure to support the FDP in its efforts to fight for affordable energy in Germany.

The Green Party’s parliamentary leader Jürgen Trittin went further, emphasizing that the government is “responsible” for soaring electricity prices. Trittin explained that over the course of the past few years more and more companies in Germany have been exempt from the EEG levy, with the result that the fiscal burden on energy intensive companies has become lower, while smaller companies, artisans and households are paying more. Over 2,000 companies are currently exempt from the EEG-Umlage, Tritten said.

TAGS: artisans | environment | tax | energy | law | Germany

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