Germany debates future of renewables support

As Germany’s election campaign heats up, the debate about the country’s renewables levy (EEG surcharge) – a surcharge electricity consumers pay with their power bill to finance renewables support – is gaining new momentum. The government coalition has already decided to use revenues from the new CO2 price in transport and heating, as well as further federal budget funds to help lower the levy. Economy minister Peter Altmaier has repeatedly said he would like to see the levy abandoned fully and financed through the budget instead.

The Climate Neutrality Foundation has now proposed just that. The national carbon price should be raised faster, with a floor price of 80 euros from 2025, and in return the EEG levy should be abolished by the same year. The foundation’s proposal is backed by a report from the Institute for Applied Ecology (Öko-Institut). Meanwhile, several NGOs, including Germanwatch and Friends of the Earth Germany (BUND), call lowering the levy a “comparatively costly measure” which doesn’t properly address social and ecological issues. The organisations argue that a report by Green Budget Germany (FÖS) shows alternative measures such as a “climate premium” for citizens would be fairer. With the premium, the revenues from the CO2 price would be paid back to citizens.

Earlier in the week, a group of researchers of the Ariadne project had said that with the right reform of environmental taxes and levies, polluters could be made to pay and citizens relieved. German politicians, researchers and the public have long debated a complete overhaul of German energy taxes and levies and its effects on fuel prices, low-income households and state revenues. After much political wrangling, the current government coalition introduced a CO2 price for transport and heating fuels at the beginning of this year, which will steadily rise over the coming years. Parts of the revenues will be used to lower the renewables levy that power consumers pay with their bills.