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European Comission's investigation iwd 3. April 2014

A threat to energy: intensive industries

Many have criticized exempting energy-intensive industries from essential portions of the Renewable Energy Sources Act (EEG) surcharge, contending that it has been partly responsible for the increase in the surcharge over the past few years. Criticism has primarily focused on the “special equalisation scheme,” but also on the exemption for companies that generate their own electricity. Three current legal and political developments will lead to new regulations that may well place a significant burden on companies that have benefited from favourable treatment in the past:

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  • The European Commission has opened an investigation to determine the lawfulness of the “special equalisation scheme” that is part of the EEG.
  • The Commission has also published a draft of new Environmental and Energy Aid Guidelines (EEAG) that, for the first time, explicitly regulate partial exemptions from surcharges for promoting renewable sources of energy.
  • The federal government has submitted a white paper and draft legislation concerning the EEG reform, which is to be implemented in 2014, calling for a modification of the “special equalisation scheme” as well as a surcharge for companies that generate their own electricity.

An increase in the surcharges imposed on companies that are currently receiving favourable treatment would reduce such charges for all others. However, the amount of relief that would result even if the “special equalisation scheme” were eliminated altogether would be limited: The surcharge would be roughly 1.35 euro cents below its current value. A typical household would save less than 4 euros per month.

For their part, companies that have benefited from the current system would be required to pay considerably more. If the “special equalisation scheme” were entirely eliminated, with back payments amounting to an EEG surcharge of 4.89 cents, this would require the chemical industry to pay 1.3 billion euros in 2014, the paper industry over 600 million euros, and the various metal processing industries a total of nearly 1.2 billion euros.

If the “special equalisation scheme” were eliminated or subjected to substantial limitations, or if additional charges of a similar magnitude were imposed, electricity-intensive companies in Germany would be considerably less willing to make investments. Even today, we are seeing divestment by energy-intensive companies and an increase in investments abroad.

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