Compromise at Last on Germany's Ecotax

Ends Environmnet Daily
November 24, 1999

Germany's governing coalition parties and the state of North Rhine Westphalia (NRW) yesterday evening struck an agreement on the progression of Germany's ecological tax reform, which is expected to allow the law to pass unhindered through Germany's upper house on Friday.

The Green party accepted that newly built efficient gas-fired power stations will only be able to win an exemption from mineral oil tax for three years, but won in return a commitment to set quotas for increasing the use of combined heat and power (CHP) as well as new government support for photovoltaic solar power. German municipalities, environmental NGOs and trade unions have been calling for a system of CHP quotas, possibly tradeable between power companies or states and with the aim of doubling CHP production by 2010, for environmental and employment reasons.

The compromise appears to have appeased the SPD chief of North Rhine Westphalia, Wolfgang Clement, who had been threatening to block agreement on the ecotax bill in protest at the risks to the lignite industry posed by the gas power station tax exemption. Sources suggested today that the state would now accept the ecotax bill when it is debated in the Bundesrat Reinhard Loske, environment spokesperson for the Green party, welcomed the compromise.

He said the time limit on new gas power station eligibility for tax breaks would not prevent construction of a new 1,200 megawatt plant planned at Lubmin in the state of Mecklenburg Pomerania, as well as a possible project near Cologne.

Environment minister Jürgen Trittin said that the new elements agreed on CHP and solar power - which are not part of the ecotax bill - would "form the keystones" of a new climate policy due to be proposed next year. A ministry spokesperson told ENDS Daily that the tax exemption for gas would be limited to power stations built and commissioned between 31 December 1999 and 31 March 2003 and would last for ten years for eligible plants.

The ecotax law is now set to pass without further changes in the Bundesrat while an amendment to the mineral oil tax law next year will incorporate the March 2003 deadline for gas tax exemption. The CHP quota will be enshrined in the revised energy conomy law in the middle of next year, while the support for solar power will be incorporated in the renewable energy feed-in law which is currently undergoing revision.

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