German industry association urges the future government to reduce subsidies for renewable energy

German industry association calls for scrapping green subsidies

Germany’s BDI industry association wants the next Germany’s government to re-evaluate the tariff system designed to boost the green energy sector.

With the general elections coming this weekend, the association has urged the future winner to stop the scheme largely considered detrimental to industry competitiveness due to rising energy costs.

Angela Merkel, who is expected to win the elections for the third time, has previously promised revamping the subsidy system but said would like to keep some incentives in place.

The BDI, however, has suggested reforming the renewable energy scheme should be the top priority after the elections, suggesting subsidies should only be paid for a much shorter period of time, covering only the early technology development.

Currently, the producers of energy are offered a long-term price guarantee for the green energy they deliver to the electric grid. This scheme, however, is being criticised as it has not only triggered the green boom, but has also increased energy prices for consumers.

"The discussion ... must focus on the question of how the power market should be structured to limit the costs of the expansion of renewable energy for consumers, to make possible its integration into the market and to safeguard supply," BDI said in a report, obtained by Reuters on Thursday.

Merkel has initiated the green revolution after the Fukushima nuclear disaster in a bid to wean Germany off nuclear power and fossil fuels. Currently, about a quarter of Germany’s power comes from renewable resources.

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