Berlin and Brussels reach agreement on cogeneration green levy

The German government and the European Union have come to an agreement on the position of the green energy surcharge on Germany’s cogeneration plants.

Economy minister Sigmar Gabriel announced on Tuesday that German firms that generate power for their own consumption can remain exempt from the surcharge.
Sigmar Gabriel with an energy efficiency document
The agreement covers existing plants with cogeneration systems combining heat and power production – the so-called “Kraft-Waerme-Kopplungsanlagen” (KWK) – that will continue to be exempt from the surcharge.

“With the agreement, we’ve created planning security for companies,” said Gabriel. His ministry had opposed the EU’s demands to impose the surcharge on the companies, which would have cost them EUR760m per year.

Future KWK plants, however, will have to pay 40 per cent of a green energy surcharge from 2017 for newly built combined heat and power plants under a new deal with the EU.

Gabriel also said, however, that the agreement with the European Commission states that the government would restrict subsidies to combined heat and power plants in firms’ factories.

Germany’s chemicals and steel sectors have particular interest in the ruling. Overall, about a quarter of the power consumed by industry is generated in-house.

Until now, many companies, especially those in energy-intensive industries, have been exempted from paying the green energy surcharge that has helped finance Germany’s shift away from fossil fuels towards renewable energy sources.

Reuters reports that in 2014, the European Commission said that waivers granted to energy-intensive industry did not constitute unfair competition, but it approved an exception for power generated by industry up to 2017.

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