German SPD fuels nuclear energy row with tax plan

1/07/2008 - 15:48

By Markus Wacket

BERLIN (Reuters) - Germany's Social Democrats are preparing to propose taxing nuclear power generators as they prepare for next year's federal election campaign, a move which will pit them against their conservative coalition partners.

An internal proposal for such a tax, a copy of which Reuters obtained on Tuesday, showed the party is ready to play on divisions within German society over the advantages and risks of nuclear energy.

It is likely to find support because consumers are angry about an energy cost explosion driven by a surge in oil prices as utilities pass on buying-in costs. The public suspects them of profiteering.

The SPD introduced and wants to stick to Germany's nuclear phase-out program for its 17 reactors by 2021, while Chancellor Angela Merkel's Christian Democrats (CDU) -- with whom the SPD shares power -- wants the plan scrapped.

The CDU argues the national economy needs cheap power for longer.

"Electricity production in nuclear power stations enjoys unjustified privileges," the SPD paper said.

It said the largely written-off equipment was highly profitable while nuclear operators did not have to pay any carbon avoidance costs and benefited from favorable arrangements for insurance and decommissioning costs.

A fuel element tax of 10 euro cents ($0.015) per kilowatt hour could be levied and used to support other energy projects, which at current retail power costs of 21.5 cents/kWh would bring in 1.6 billion euros a year, it said.

Power prices would not be affected as without the tax, the 1.6 billion would be pocketed as extra profits by the utilities, it said.

CDU politicians argue Germany must run its nuclear power stations beyond 2021 as they provide one third of the country's electricity needs which cannot be immediately replaced by renewable energies or thermal plants burning other fuels.

The Berlin environment ministry, headed by the SPD's Sigmar Gabriel, at the weekend denied a media report that he was planning the tax.

Sources close to the events say the party is serious about pulling together its expertise and staff in the environment, transport and finance departments to broker such a scheme.

Relations are already strained in the coalition and utilities have stepped up calls for a nuclear rethink.

Fritz Vahrenhold, head of the renewable business unit RWE Innogy of the RWE group, Germany's largest power producer, said on German radio the tax idea was out of the question as Germany was heading for power supply gaps.

"We are already importing power and power is going to be very, very expensive," he said. "I believe we will soon be in a dead end situation and you cannot step on the accelerator when you already have a brick wall in sight."

(Reporting by Markus Wacket; editing by James Jukwey)

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