German Greens Want to Abolish Feed-in Tariff Surcharge

I was surprised to see German Green politicians propose reducing the feed-in tariff surcharge by 5 cents. They leave mostly unanswered what should replace that revenue stream, but it looks like they want some kind of financing from tax revenues.

That is a bad idea. Hans-Josef Fell (one of the original authors of the German feed-in tariff law in 2000, sums up the ways this proposal is dubious and asks his party to refrain from such a move.

One problem is of course that of securing the necessary funds to actually pay all the feed-in tariffs that were already promised for a 20 year period in the past.

As he notes, we have a problem with the corona crisis. Said problem will put strong pressure on public finances. Not the kind of environment you would want to start touching the strong financial foundation of renewable energy in Germany.

The 2000 legislators did not opt for a tax financial base to make sure the system works in the long term. If you have a need to find tax funds every year, it might be open to doubt if next year’s funds can be secured. If you have the cost just as a part of the energy price, that uncertainty disappears.

Fell also massively distrusts the European Commission. As he points out correctly, under recent case-law of the European Court of Justice moving to a tax based system gives the Commission the power to decide about renewable energy under EU state aid rules.

That may be somewhat mitigated if the EU Commission actually follows through with the policy promised in the “European Green Deal” to make Europe the first climate neutral continent, which would require moving away from the failed auction model they have been pushing through in Germany. But I am still not convinced that will happen. And basic values of democracy require keeping these important questions for the German legislator to decide.

So I completely agree with Fell and disagree with the younger Green politicians proposing to do away with the feed-in tariff that has seen such spectacular success (until it was changed to an auction model).

But the good news is that even if those proposals lead to completely destroying the feed-in tariff system in Germany, it is already too late for that to rescue fossil fuel. Over ten years of successful feed-in tariff in Germany have lowered solar energy prices to a point where feed-in tariffs are nice to have, but in no way anymore a necessary condition to make solar win.

On the other hand, if the Green Party wants to do something about the climate crisis, the last thing they should do is change the most successful policy that actually helps with achieving such goals. Instead they should join Fell in calling for going back to the model before the harmful change to auctions.

Published by kflenz

Professor at Aoyama Gakuin University, Tokyo. Author of Lenz Blog (since 2003, lenzblog.com).

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: