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European Union May Challenge German Green Subsidy

German FlagThe European Union is threatening to end a German exemption for heavy industry that allows those industrial users to avoid paying surcharges to support renewable energy.

Germany collects surcharges from companies to help fund solar and wind power installations. The exemption for large electricity users like cement factories, steel makers and chemical plants is meant to protect them from being undersold in the global market. But the green subsidies are causing skyrocketing energy prices, reports Reuters.

A Social Democrat warned that the EU planned to investigate German discounts. The VIK industry lobby for heavy energy users warned the move could cost companies billions of euros in additional costs and “destroy Germany’s industrial core.”

Negotiators have traveled to the EU headquarters in Brussels to discuss the matter.

A new German government energy policy is under discussion between Chancellor Angela Merkel’s conservatives and coalition partners. The German government denied any plans to do away with the discounts, though some negotiators admit that some of the 2,300 companies in the exemption program may not deserve the breaks.

A document quoted by Reuters suggested the government was prepared to reduce the discounts by more than 1 billion euros ($1.35 billion). But preserving global competitiveness of the industries is a priority for the German government.

Energy policy is a central theme in ongoing coalition talks between the conservatives and the SPD. Both parties agree on the need to reform Germany’s renewables law (EEG), which has led to runaway energy costs for consumers.

VIK said a reform of the EEG could lower energy costs, reducing the need for industry discounts and retaliatory action from Brussels.

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