German ecotax plans thrown into crisis

Coal lobby pushes SPD to renege on deal with Greens to exempt gas power stations from tax

German government plans to increase energy taxes from January under its ecological tax reform programme have been thrown into chaos by a last minute change of position by the Social Democrats (SPD). The Greens, minority partners in the government, say the move reneges on an agreement with them and capitulates to Germany's powerful coal mining sector. Introduction of the new round of ecotaxes could now be delayed until April, according to some observers.

The row centres around an SPD move to limit a proposed exemption from mineral oil taxes for the most efficient gas-fired power stations. The exemption had been agreed between the parties as one part of a complex package of tax rises on a range of energy products, balanced by cuts in taxes on employers and employees.

When the cabinet approved its outline proposal for a second round of ecotax reform in August, the Greens won the inclusion of a clause exempting combined cycle gas power stations achieving over 55% conversion efficiency from mineral oil tax (ENDS Daily 26 August). Last Friday, the coalition partners amended this deal, with the Greens accepting that power stations would have to achieve 57% efficiency before being exempted from mineral oil tax, while the SPD conceded on some points including a lower rate of diesel tax increase for local buses.

However, yesterday morning, the SPD decided to further limit the exemption to power stations achieving over 58% efficiency, according to some reports, or to delete the clause altogether according to others. As a result, a scheduled vote on the whole ecotax package by the Bundestag finance committee, had to be cancelled.

The SPD and Greens then held emergency talks but failed to find a compromise. Intensive negotiations resumed today in the hope of presenting a new position to the finance committee tomorrow. An official of the Green party told ENDS Daily, "The situation is quite tricky. The SPD is not playing a good role. It is trying to influence the media and has said things which are wrong".

The Greens want to favour electricity generation from advanced gas-fired stations, which currently pay mineral oil taxes while coal burning stations do not. Gas is cleaner than coal, the party says, and can also help Germany to achieve its planned phase-out of nuclear power.

However, SPD politicians representing coal mining districts are apparently worried that the proposed tax exemption for gas power stations could lead to the sort of "dash for gas" that greatly reduced the UK's coal industry in less than a decade.

Follow Up:
German parliament, tel: +49 30 2270; Green party, tel: +49 30 227 55518.

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