German red/green ecotax debate rumbles on

Lafontaine cuts renewable energy support in draft budget, Greens push for petrol price increase

Tensions in Germany's new SPD/Green ruling coalition continued this week as finance minister Oskar Lafontaine was reported to have proposed cutting planned levels of support for the country's renewable energy programme in Germany's draft 1999 budget.

New energy taxes due to be introduced under the budget are forecast to bring in around euros 150m from renewable energy sources alone. All of this money was due to be ploughed back into the sector through support programmes under an agreement reached between the SPD and the Greens shortly after the election.

But the Süddeutsche Zeitung reported yesterday that the amount of cash to be returned to renewables had been slashed because the finance ministry was having difficulty balancing the budget. The ministry refused to confirm or deny the reports, but the Greens said they were correct. A spokesperson told ENDS Daily that the party would "insist on the full amount raised from renewables being returned to the sector". He suggested that Mr Lafontaine was seeking to gain leverage to make spending cuts elsewhere in the budget, knowing that the Greens would oppose any cut in renewables support.

The German Wind Energy Association today condemned the proposal, saying it "stands in diametrical opposition to the original ecological reason for the tax." Heinrich Bartelt warned the new government that it risked "losing the trust of the renewable energy sector" if it had to resort to "degrading" the sector into a means for "covering up holes in the budget." However, Wolf van Fabeck of the German Solar Energy Association said he thought a national programme to install solar panels on the roofs of 100,000 private homes would be unaffected.

Adding fuel to the fire, chancellor Gerhard Schröder is reported to have refused to countenance any increases in petrol prices beyond the six pfennigs per litre agreed by the coalition. The move follows a suggestion by the Greens that there was now "leeway" to increase the tax following the fall in world oil prices.

The chairman of the parliamentary SPD, Ernst Schwanhold, said that such a move would be "economically damaging" and would "send out the wrong signals". Greens spokesman Harald Händel said that the matter was closed for this year, but that the party would argue for petrol prices to rise faster than other energy prices in future.

Follow Up:
German Green Party, tel: +49 228 91 660; German Wind Energy Association, tel: +49 228 35 22 76; German Solar Energy Association, tel: +49 241 51 16 16.

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