Germany – Federal Coalition Agreement: Energy and Climate Change

The coalition agreement emphasises the positive influence that the shift to sustainable energy can have on employment. The coalition partners reiterate their commitment to existing policy measures including the Renewable Energy Law, the Combined Heat and Power Law and offshore wind targets. The new Government will review the Renewable Energy Law, reducing subsidies to reflect technical developments. It will lengthen the time limit on subsidies for wind energy to help achieve offshore wind targets.





Eco Tax and Mineral Oil Tax





There is no pledge to introduce further eco tax increases after the final stage scheduled for 1.1.03. Instead conditions for further increases will be reviewed in 2004. Reduced eco tax rates for the manufacturing industry will be made less favourable. The mineral oil tax on gas will be adjusted to ensure equality with other energy sources. The Government will ensure that his does not jeopardise the expansion of combined heat and power plants.





Kyoto and Renewable Targets





The new Government will propose that the EU adopts a 30% greenhouse gas reduction target for 2020 (against 1990). If member states agree, Germany will work towards a 40% target for the same period. The Government will aim to double the surface area of thermal solar collectors within the next four years.





Emissions Trading





The new Government underlines its support for the introduction of a European emissions trading system. However the agreement states that this should not endanger industry’s voluntary agreements, which have made a major contribution to the fact that Germany has nearly reached its burden sharing target for 2008-12. The EU Directive must, therefore, take the following into account:





Germany’s greenhouse gas reductions since 1990 must be taken into account when distributing emissions permits.


Certificates must be permanently free.


Trading must be compatible with Kyoto flexible mechanisms.


Solutions to ensure that the voluntary agreements are respected e.g. legally binding pooling arrangements, must be workable.





Renewable and Energy Efficiency Programmes





The commercialisation programme for renewable energy technologies which currently has an annual budget of ? 200m will receive additional funding (2004: ? 200m, 2005: ? 220m, 2006: ? 230m). Energy saving in the built sector will be continued through a new programme to support 30 000 passive homes (houses or apartment blocks). The new administration will adapt the existing funding programme to encourage energy improvements on existing buildings. >From 2005, the programme will be based on grants and tax benefits rather than the current low-interest loans.





The ‘Homeowners Grant’ which previously favoured those purchasing a newly built home, will now apply equally regardless if the home is newly built or an existing building. The grants will also be restricted to applicants with children. The ecological bonus grant for low energy construction or investment in energy improvements will be maintained.





Farmers will be encouraged to diversify and produce biofuels and generate energy from biomass. (Funding will continue under the commercialisation programme). Construction legislation will be revised to facilitate the building of biomass plants.





Energy Research





The agreement states that environmental and energy research is a key prerequisite for the ecological modernisation of German society. The Government will introduce a new energy research programme to strengthen Germany’s sustainable energy supply. Renewable energy and energy efficiency will be a priority. The research programme will also seek to improve the institutional structure of bioenergy research. Special funding will go to environmentally friendly production technologies and to measures t