05/23/2012

BDEW on the adoption of guidelines on emissions trading subsidies:

EU undermines national funding programme for new power stations

Hildegard Müller: Amendments decided by the European Commission are disappointing to the energy industry

Brussels/Berlin, 23 May 2012 – "The EU Commission's very restrictive requirements regarding financial assistance granted to the construction of new, highly efficient power plants capable of carbon capture and storage (CCS) undermine the German Federal Government's power plant funding programme embedded in its 2010 energy concept and make it virtually impossible. That means that the opportunity has been lost to improve in the short term the conditions for investment in the construction of new conventional power plants. The funding programme could have served as a temporary solution until a decision is taken on the necessary flexible capacity mechanisms. For this reason, the EU Commission’s decision is disappointing." This declared Hildegard Müller, Chairwoman of the General Executive Management Board of the German Association of Energy and Water Industries (Bundesverband der Energie- und Wasserwirtschaft - BDEW) after the EU Commission surprisingly adopted European guidelines on support to industry in the context of the Emissions Trading Scheme. "It is all the more important now that the German Bundestag and Bundesrat adopt as an absolute minimum the amendment of the Cogeneration Act tomorrow and probably on 15 June, respectively. This could enable a positive signal to be still given to power station investments in Germany", Müller underlined.

With its decision, the EU Commission determined that strict criteria have to be met for granting subsidies to new highly efficient power stations constructed between 2013 und 2016. The rules allow subsidies of 15 percent of the investment costs on condition that the Carbon Capture and Storage (CCS) technology be fully implemented before 2020. "Irrespective of the uncertainty regarding the adoption of a CCS law in Germany, this approach does definitely not provide any incentive to investments because the financial support would already be overcompensated by the additional costs required for the use of CCS technology", Hildegard Müller emphasised.

For subsidies of 10 percent of the investment costs, a regular tendering procedure meeting different criteria has to be carried out. Where no restrictions have to be observed, the rules allow subsidies of only 5 percent of the investment costs. Müller: "This will however not provide an incentive effect for investments. The power station funding programme scheduled by the German Federal Government, which is limited in terms of time and volume, could have served as a temporary solution in the light of the present difficult economic conditions for power station investments." The current heated discussions about the implementation of flexible capacity mechanisms could thus have been conducted in a somewhat more properly manner.

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