German Nuclear Tax to Cost Billions

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Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland)--German energy companies are going to have to pay billions of euros each year to extend the lives of their ageing nuclear plants. The German government has announced plans to impose taxes on nuclear power plant operators like E.ON AG (OTC:EONGY) (Dusseldorf, Germany) and RWE AG (OTC:RWEOY) (Essen, Germany), among others, as part of a wider national austerity plan that it hopes will save more than 80 billion euros (US$96 billion) by 2014.

Germany intends to phase out all 17 of its nuclear power plants by 2021 but the current government, under chancellor Angela Merkel, is in favour of controversial plans to extend the life of some of those facilities by between 10 and 25 years in order to reach its ambitious climate goals and ward off an inevitable energy crisis if the plants are closed on schedule. However, the government plans to tax the energy companies heavily for any proposed life extensions. According to the austerity document, the government aims to raise 2.3 billion euros (US$2.77 billion) a year from the nuclear tax, amounting to about 10 billion euros (US$12.04 billion) by 2014.

The government maintained that the nuclear tax will help offset the cost of paying for the decommissioning of older nuclear facilities, while funding the interim storage of nuclear waste from the country's nuclear waste storage facility at Asse in Lower Saxony. Roughly 126,000 barrels filled with low-level radioactive waste are stored in the old salt mine, which has started letting in groundwater and has been deemed unstable. The government also justified the nuclear tax by saying that because nuclear reactors are not impacted by CO2 emissions penalties like fossil-fuel power plants, energy companies have been making huge profits.

Germany's nuclear plants are controlled and operated by E.ON, RWE, Vattenfall AB (Stockholm, Sweden) and Energie Baden-Württemberg AG (EnBW) (Karlsruhe, Germany). The power plants account for 26% of the nation's energy consumption. For additional information, see related October 19, 2009, article - Germany on Track to Extend Life of Nuclear Power Plants

Earlier this year, state-owned bank Landesbank Baden-Württemberg claimed that the four energy companies stand to make profits of up to 233 billion euros (US$329 billion) if the nuclear plants obtain lifespan extensions of 25 years. However, the lifetime extensions have not been finalized, and according to recent reports, they may be scaled back to 10 years to avoid a protracted political and legal fight. For additional information, see January 25, 2010, article - Germany's Nuclear Future to be Decided this Summer.

A decision on nuclear extensions is due this fall, but it may come too late to save EnBW's Neckarwestheim 1 plant, which was due for closure this spring, and RWE's Biblis facility which faces closure this autumn. Last month, Neckarwestheim 1was brought offline for maintenance and upgrades, and the company remains optimistic about getting an extension.

"Once again, we are investing tens of millions [of euros] in the high technical level of our plant," said Jörg Michels, the technical director of the Neckarwestheim nuclear power station. "In view of the energy concept announced for the autumn by the federal government, we assume that Neckarwestheim 1 will have additional prospects for the future."

He continued: "The federal government has already announced it is making term extensions dependent on strict German and international safety standards. Block I is ideally prepared for this. The plant not only satisfies the safety-technical requirements applicable in Germany, but also the standards required for new plants by the International Atomic Energy Agency (IAEA). In addition, last year the IAEA concluded, after an intensive audit, that Block I is a very good plant measured against international standards and could be operated for a total of 60 years."

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