Germany Delays Controversial Coal Levy

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Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland) -Germany has delayed imposing an additional levy on coal-fired power plants until it assesses the possible impact on jobs in the sector.

The Economy Minister, Sigmar Gabriel, wants to impose a coal levy on the oldest coal-fired plants as part of the nation's efforts to reduce CO2 emissions by 40% by the end of the decade. The legislation, revealed last month, will force utilities to further cut emissions at their most polluting plants or face fines. For additional information, see March 26, 2015, article - Germany Targets Coal-Fired Power.

However, he has informed unions that he is postponing the controversial levy until a further review is conducted into how it will affect CO2 emissions, the price of electricity and those working in German power plants and coal mines.

"We need certainty about the numbers and consequences," Gabriel wrote in his union letter, "and nothing will be decided prior to that."

He added: "Should this [review] in fact confirm the misgivings expressed by unions IG BCE and Verdi of an industry meltdown with a considerable loss of jobs, then the economy ministry will of course change its proposals to achieve its climate targets".

The levy has been attacked by power companies, the mining sector and workers unions. Over 13,000 coal miners and power plant workers took to the streets of Berlin last weekend to protest.

Germany's second largest power utility, RWE AG (OTC:RWEOY) (Essen, Germany), hit out at the proposals earlier this week.

"If the undertaking by the economy and energy ministry is implemented as planned, it will lead to major structural upheavals in the lignite industry," argued RWE's chief executive, Peter Terium. "These plans would lead, in the short term, to a disorganised, rushed exit from lignite-based electricity production. It would mean the loss of a secure, low-cost and subsidy-free source of energy, in and for Germany. The consequences would be far-reaching."

He added: "These plans also threaten tens of thousands of otherwise secure jobs that are either directly or indirectly connected with the lignite industry".

Since Germany decided to abandon nuclear power in 2011 and ordered the immediate closure of its oldest reactors, there has been a greater need to use fossil-fuel powered plants to balance the fluctuating amount of electricity contributed by renewable energy sources like solar and wind. This, in turn, has increased the country's CO2 emissions and threatened its lofty renewable energy and emissions targets. In 2013, coal's share in the German electricity mix was at its highest for almost quarter of a century.

The proposed levy is allegedly impacting plans by Sweden's state-owned Vattenfall AB (Stockholm, Sweden) to sell its German coal-fired plants and coal mines, according to sources close to the company. The company wants to sell off 9,000-megawatts (MW) of lignite coal-fired power plants in the eastern part of Germany. For additional information, see November 10, 2014, article - Vattenfall to Sell German Coal Operations.

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