PLASTICS AND ENERGY
European Commission opens proceedings against German price relief for energy-intensive companies / Support for renewables also eyed critically
As expected, the European Union has officially opened proceedings against Germany in conjunction with its rebates to energy-intensive companies such as plastics manufacturers. Under the law known by its acronym, EEG, these companies – provided they are engaged in international competition – are exempted from paying the national surcharge on electricity bills, which supports renewable energy sources.
The European Commission's vice president and competition commissioner, Joaquin Almunia, has long cast a critical eye over the German practice, saying the European Commission believes the price relief provides an unfair competitive advantage to Germany’s heavy industry and in fact constitutes an illegal subsidy. The country’s political leadership has been aware for some time that the move was coming. Also aware that the EU as well as German industry were unhappy with the level of support for renewables, the parties to the new national coalition agreement, Chancellor Angela Merkel’s Christian Democrats (CDU) and the Social Democrats (SPD), foresee a slower progression of aid to solar and wind energy.
Currently, around 1,700 firms with manufacturing plants in Germany are exempted from the levies supporting renewables. Next year, the total is thought likely to increase to 2,700. “Green” organisations in particular have been critical of the exemptions but in favour of the aid to renewables. In this respect, the German Friends of the Earth affiliate, BUND (www.bund.net), has urged the national government to stand firm against the EU’s challenge.
In reaction to the start of the proceedings, Merkel said her government will “make it clear” that Europe will not become stronger by endangering jobs in Germany. To remain a favourable location for manufacturing, the country needs competitive companies, she added. In a separate statement, the group representing energy-intensive industries, Energeintensiven Industrien in Deutschland (EID), said it was “confident” Germany’s position would be upheld.
In contrast to the Commission, EID sees no unfair competitive advantage in Germany’s price relief for energy-intensive industries, said Utz Tillmann, general manager of the German chemical industry association, VCI (Frankfurt; www.vci.de), and one of the spokespersons for the energy-intensive grouping. The German chemical workers union, IG BCE, which represents employees of the chemicals, plastics and energy sectors, said it feared the EU plans could endanger the country’s shift away from nuclear energy while still playing into the hands of “ecology hardliners.” The union's chairman, Michael Vassiliadis, said his group was “in a position to exert pressure at short notice.”
Germany will have 30 days to present its case to the Commission, which, in principle, could require that the government rewrite the energy legislation. While some believe companies which have profited from the exemption in the past may have to repay some of the levies, others say it is unlikely. In VCI’s view, repayment would have to be limited to the period after 2012, when the German legislation was last revised. Even without repayment, BASF (Ludwigshafen / Germany; www.basf.com), the world’s largest chemical producer and one of the largest energy consumers, has estimated an end to the exemption would cost it up to EUR 300m a year.
The European Commission's vice president and competition commissioner, Joaquin Almunia, has long cast a critical eye over the German practice, saying the European Commission believes the price relief provides an unfair competitive advantage to Germany’s heavy industry and in fact constitutes an illegal subsidy. The country’s political leadership has been aware for some time that the move was coming. Also aware that the EU as well as German industry were unhappy with the level of support for renewables, the parties to the new national coalition agreement, Chancellor Angela Merkel’s Christian Democrats (CDU) and the Social Democrats (SPD), foresee a slower progression of aid to solar and wind energy.
Currently, around 1,700 firms with manufacturing plants in Germany are exempted from the levies supporting renewables. Next year, the total is thought likely to increase to 2,700. “Green” organisations in particular have been critical of the exemptions but in favour of the aid to renewables. In this respect, the German Friends of the Earth affiliate, BUND (www.bund.net), has urged the national government to stand firm against the EU’s challenge.
In reaction to the start of the proceedings, Merkel said her government will “make it clear” that Europe will not become stronger by endangering jobs in Germany. To remain a favourable location for manufacturing, the country needs competitive companies, she added. In a separate statement, the group representing energy-intensive industries, Energeintensiven Industrien in Deutschland (EID), said it was “confident” Germany’s position would be upheld.
In contrast to the Commission, EID sees no unfair competitive advantage in Germany’s price relief for energy-intensive industries, said Utz Tillmann, general manager of the German chemical industry association, VCI (Frankfurt; www.vci.de), and one of the spokespersons for the energy-intensive grouping. The German chemical workers union, IG BCE, which represents employees of the chemicals, plastics and energy sectors, said it feared the EU plans could endanger the country’s shift away from nuclear energy while still playing into the hands of “ecology hardliners.” The union's chairman, Michael Vassiliadis, said his group was “in a position to exert pressure at short notice.”
Germany will have 30 days to present its case to the Commission, which, in principle, could require that the government rewrite the energy legislation. While some believe companies which have profited from the exemption in the past may have to repay some of the levies, others say it is unlikely. In VCI’s view, repayment would have to be limited to the period after 2012, when the German legislation was last revised. Even without repayment, BASF (Ludwigshafen / Germany; www.basf.com), the world’s largest chemical producer and one of the largest energy consumers, has estimated an end to the exemption would cost it up to EUR 300m a year.
19.12.2013 Plasteurope.com [227089-0]
Published on 19.12.2013