German EEG Reform Decided at Cabinet

Now the German Cabinet has decided to go ahead with the idea of radically changing the system of financing renewable energy in place since 20 years. In the future, much of the revenue will come from the federal budget. And that in place will come from a price of 25 Euro per ton of CO2.

The problem with that is of course that this may destabilize the system. With a large bill for COVID related expenses coming up, it may be difficult to come up with the necessary funds in every fiscal year.

Also, this makes the whole system “state aid” under EU law, giving the EU Commission veto power over all German legislation in the field. Which would be a bad idea with the less than stellar record of the Commission, which was one of the harmful forces pushing for the change to an auction system.

Unfortunate, but the main success of the EEG is a done deal. Bringing cost way down in the last 20 years is a success that can’t be reversed, whatever happens in the future.

Published by kflenz

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

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