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German Government Begins Green Subsidy Roll-Back

Andrea Thomas, The Wall Street Journal

German Economics and Energy Minister Sigmar Gabriel will present a fundamental reform of subsidies for renewable energy Wednesday in a bid to reduce financial support and slow down cost increases caused by the country’s ambitious plan to shift to green energy in the coming years.

He will present the measures at a closed-door meeting of Chancellor Angela Merkel’s cabinet, which will meet for a two-day working session in Meseberg starting Wednesday to discuss the new government’s upcoming agenda, a spokesman for the economics and energy ministry said.

Mr. Gabriel, who is also vice-chancellor and chairman of the Social Democrat junior coalition partner, will propose to reduce the average subsidy for wind, solar and other renewable power sources to an average of EUR0.12 per kilowatt hour in 2015 from EUR0.17 at present, according to Spiegel-Online, which cited from a 12-page document compiled by the ministry.

Capacity of on-shore wind and solar plants can in the future only be expanded by 2,500 megawatts annually while the annual increase target for off-shore wind power plants is set at 6.5 gigawatts until 2020, according to the report.

Stefan Rouenhoff, spokesman for the ministry, declined to comment on the reported details of the plan.

The measures are set to become law on Aug. 1 as part of an amended renewable energy law, which funds investments in green energy, according to Der Spiegel.

Germany accelerated its plan to exit nuclear energy in the wake of the 2011 Fukushima disaster. After that, the country redoubled its push into renewable energy, setting up subsidy programs to support the expansion of wind, solar and other green energy sources.

This energy transformation has been pushing up energy prices and costing German companies their competitive edge in global markets.

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