Ministry to tweak climate levy to ease industry concerns - reports

The planned climate levy on old coal-fired power stations might be adapted to ease the concerns of large power companies and unions, the deputy minister for energy has indicated, according to several media reports. The signal comes shortly before demonstrations of over 10,000 trade union members against the climate levy, which would affect mostly brown coal-fired power stations.

Rainer Baake, State Secretary for Energy told members of the press that the levy would be connected to the wholesale power price, instead of a fixed amount per tonne of CO2 emitted. This more market-based concept would mean the levy would rise and fall with the wholesale price. In the original ministry proposal, the so-called climate contribution was fixed at 18-20 euros per tonne of CO2 emitted over a limit of seven million tonnes of CO2 per gigawatt of installed capacity, for all power stations older than 20 years. Older plants can emit even less – down to 3 million tonnes for a 41-year-old station. Plants would make this "climate contribution" by buying additional EU Emissions Trading System (EU ETS) allowances.  In 2014, the average price of one EU ETS allowance (for 1 tonne CO2) was 5 euros.

Trade unions and operators of coal plants and mines fear that such a levy would make their business un-economical and cost up to 100,000 jobs, particularly if the power price doesn’t rise like the government’s projections assume. The ministry was now comparing figures and solutions with the power station and mining operators in Lusatia and the Rhineland, Baake said, according to the business daily Handelsblatt. The result would ensure planning security for these utilities. At the same time, Baake made clear that Germany’s climate target of reducing CO2 emissions by 40 percent over 1990 levels was not negotiable.

In a media briefing published on the government website, energy minister Sigmar Gabriel (SPD) said that he understood the worries of people employed in or dependant on the coal sector and that his proposals would prevent sudden shut-downs of coal mines. In a letter to the trade unions, Gabriel reassured them again that he would prevent structural ruptures, saying that he would of course change the design of the climate levy should their concerns prove to be true.

The news magazine Der Spiegel meanwhile reported that Chancellor Angela Merkel (CDU) has asked that the auditing firms of power companies RWE, Mibrag and Vattenfall calculate the impact of the planned levy to see if it would endanger the German brown coal industry.

In the climate contribution debate, different groups come to very different results as to if and how many jobs it might endanger and how much utilities like RWE and Vattenfall who operate old brown coal plants and mines will be affected by the levy.

Analysts from investment bank Lazard, commissioned by trade union IG BCE, found that the climate levy as proposed would cause a “domino effect” of power station and mine closures. But the ministry and many researchers say that the levy would motivate plant operators to reduce power generation and run units more economically, which would prevent large financial losses and station shut-downs in 90 percent of German plants.

Industry and unions say that the climate levy puts up to 100,000 jobs at risk, but the Federal Environment Agency anticipates a loss of only 4,700 jobs, saying the union figure was “wholly without foundation.”

Earlier this week, four senior members of Angela Merkel’s ruling Christian Democrats (CDU) sent a letter to all members of the CDU-CSU parliamentary group, criticising in particular the CO2 reduction instrument as a “massive burden on industry,” which could endanger tens of thousands of well paid jobs and lead to companies moving production abroad.

The debate will come to a head on Saturday when unions expect more than ten thousand people to join protests against the government plans in Berlin while environmental groups plan a human chain at the open-cast mine Garzweiler in the west of the country to protest against “climate killer coal” and demand an “overdue exit”.

More background on the German climate levy debate:

CLEW News: German government wants to tackle old coal-fired plants to meet emission goals

CLEW News: Emission cap faces legal challenge, utility resistance

CLEW News: Researchers rebuff claim of major job losses from coal levy

CLEW News: “Time is running out” - Struggle over future of brown coal in Germany heats up

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