German Green Energy Law Clears Final Hurdle

Germany's upper house of parliament, the Bundesrat, approved on Friday revamped legislation on funding renewable energy, clearing the way for the law to come into force on Aug. 1.

The far-reaching law, which seeks to cap support payments for renewables without jeopardizing the country's shift towards a low carbon economy, had hung in the balance, after months of negotiations, due to wrangling with European Union authorities over its compatibility with state aid guidelines.

But Brussels granted its consent this week, providing encouragement to the Bundesrat, which represents Germany's 16 states, to vote through the reform package to the renewable energy act (EEG) in its Friday session.

"Germany has embarked on a long project to derive the energy supply of an industrial nation from renewable energy sources, which is historically without parallel," Stefan Wenzel, environment minister of the state of Lower Saxony, told the Bundesrat.

Germany's lower house of parliament, the Bundestag, approved the reform package two weeks ago.

On Wednesday, European Competition Commissioner Joaquin Almunia said Berlin had allayed concerns that German industry might receive unfair advantages through exemptions from obligatory payments towards the cost of funding green energy.

He also said Germany had cleared up two other remaining issues - the need to bring foreign renewable power into planned auctions for green energy from 2017 and to change the system of allowing industrial companies, which produce their own power, full discounts on the EEG after that date.

In 2011 Germany embarked on a strategy to accelerate its exit from nuclear energy in light of Japan's Fukushima crisis, stepping up its renewables expansion and lowering its dependence on power stations that run on gas and coal.

Green energy from sources such as wind or sunshine has already reached a share of 25 percent of Germany's power mix and is meant to reach 45 percent by 2025 and 60 percent by 2035.

The EEG reform is aimed at lowering the cost of green energy funding for consumers, among a number of other elements that will be introduced in future, including compensation of conventional producers for loss of market share.

(Reporting by Markus Wacket and Vera Eckert; Editing by Gareth Jones)