German industry says energy reform plans threaten jobs

BERLIN (Reuters) - German industry has warned that the government’s new energy plans jeopardize jobs in Europe’s biggest economy, in particular a proposal to make firms that generate their own electricity pay charges to support renewable sources.

The leader of the Social Democratic Party (SPD), German Economy Minister Sigmar Gabriel delivers a speech about his party's strategy for this year's European Parliamentary election during an extraordinary SPD party congress in Berlin January 26, 2014. REUTERS/Thomas Peter

Social Democrat (SPD) Economy Minister and Vice-Chancellor Sigmar Gabriel has outlined a much-needed reform to a system of costly subsidies which has helped to fund a boom in green energy in Germany. He is now working on details.

The reform, a delicate balancing act between maintaining growth in the renewables sector and keeping heavy industry on board with affordable power, envisages cuts of up to a third in green subsidies by 2015 but also reduces support for industry.

The Federation of German Industry (BDI) said Gabriel’s plans put 900,000 jobs in Germany at risk, according to Welt am Sonntag. In a letter to 900 companies, BDI chief Ulrich Grillo said the existing help given to energy-intensive firms was a condition for companies to stay in Germany.

“In this way (with an additional burden for companies), there will be a risk of companies moving away and that can lead to big job losses,” Grillo wrote, according to the paper.

Industry accounts for around a quarter of Germany's export-oriented economy. Last week, ArcelorMittal ISPA.AS, the world's biggest steelmaker, warned the energy reforms would prompt companies to scale back investments.


Some members of Chancellor Angela Merkel’s conservative bloc in parliament have also demanded changes in Gabriel’s plans.

“We will certainly not pass Gabriel’s blueprint on a reform of the renewable energy law in its current form,” senior conservative Peter Ramsauer told Die Welt newspaper.

He said it was “pure madness” to trim benefits for companies that generate their own electricity and added that big employers such as rail operator Deutsche Bahn could be hit.

Until now, producers of power for their own industrial use have been exempted from a surcharge added to power bills which is funnelled to green energy producers and guarantees them a ‘feed-in-tariff’ above market prices.

European Energy Commissioner Guenther Oettinger urged the German finance minister to reduce energy tax to help German companies stay competitive. Taxes and charges added to consumers’ bills for the renewable subsidies make up about half of companies’ energy costs, he said.

‘Mittelstand’ companies, the small and medium-sized firms that form the backbone of the German economy, also want lower taxes on electricity.

“Cut power tax now: ease the burden for Mittlestand and citizens,” Mario Ohoven, head of the BVMW Mittelstand group wrote in a letter seen by the Bild daily.

Gabriel wants to have his reform passed by the summer.

While the ‘grand coalition’ of Merkel’s conservatives and Gabriel’s SPD has a big majority in the lower house, the Bundesrat upper house could delay it if Germany’s 16 federal states have major objections.

SPD Environment Minister Barbara Hendricks urged the states to put aside individual concerns - some northern states are worried about cuts to wind power subsidies while Bavaria is concerned about biomass - and to think of the greater good.

“If the states insist on the demands of the last few days, there won’t be enough public spirit,” she told Die Welt.

Additional reporting by Andreas Rinke; Editing by Gareth Jones