Backlash in Germany’s industry to increased costs to support renewable energy

Australia’s Business Spectator provides an important article on how Germany’s heavy industry is being hit in the pocketbook to help fund renewable energy as part of Germany’s energy transition strategy.  Surely there must be a better way to promote auto-production. The success of Europe’s energy policies will obviously have a big impact on Australia’s policies.

German industrials target renewables impost

German firms Merck, Aurubis and Salzgitter voiced opposition to a planned law requiring higher payments from big users of energy to help fund renewable energy, with some pointing to millions of euros of additional costs.

In January, Germany’s cabinet backed a plan to make firms that produce their own power start paying charges to support renewable power – from which they had been exempt – to spread the burden of financing green policies.

“These additional costs would not only put a question mark behind investments made in Germany. In the long term, they would threaten our German plants,” Peter Willbrandt, chief executive of Aurubis, Europe’s largest copper producer, told German weekly Euro am Sonntag.

He added Aurubis would have to pay a total of 60 million euros ($US82.12 million) in electricity costs per year for its German plants as a consequence of the government plans.

“This is something we cannot shoulder in the long run.”

Karl-Ludwig Kley, chief executive of Merck KGaA – the world’s largest maker of liquid crystals used in TVs, tablet and smartphone screens – said the government plans could “hardly be beaten for absurdity”, the weekly said.

German Economy Minister Sigmar Gabriel is looking to reform the way Germany supports its growing green industries that derive power from sources such as wind and solar, as costs have spiralled out of control, burdening private consumers and creating niches of non-payers.

Salzgitter, Germany’s second-largest steelmaker after ThyssenKrupp and holder of a 25 per cent stake in Aurubis, expects additional costs of up to 75 million euros as a result of the plans, Euro am Sonntag added, citing a spokesman for the company.

“This is an existential threat,” he was quoted as saying.

The proposal calls for industry to pay 90 per cent of the renewable support payments, currently at 6.24 cents per kilowatt hour, for new conventional power plants they build on manufacturing sites and for those planning to produce power from low-carbon green energy and combined heat power plants to pay 70 per cent.

Until now, producers of power for their own industrial use had been exempted from paying the surcharge – which is channelled to green energy producers under a feed-in tariff law that guarantees them above-market earnings.

The argument had been that this would protect industry’s international competitiveness. As a result, industry had been raising the percentage of its own power provision to 25 per cent of total requirements.

ThyssenKrupp late last month said the plans would lead to additional costs of 30-40 million euros per year.