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German Chancellor Angela Merkel’s effort to create jobs in renewable energy is faltering as subsidy cuts and competition from Chinese manufacturers forces the industry to stop hiring for the first time in eight years. ‘The German government is running the German solar industry into destruction.’

Employment in Germany’s clean energy industry probably will “stagnate” this year after creating about 31,600 jobs a year since 2004, said Claudia Kemfert, senior energy analyst at the DIW economic institute in Berlin. Four German solar companies filed for protection from creditors since December including Q- Cells SE, once the world’s biggest cell maker.

Merkel is paring solar incentives after a boom made Germany the largest global market for the technology, piling pressure on domestic manufacturers as Chinese manufacturers led by Suntech Power Holdings Co. take market share. The forecast underscores the difficulty Germany will have in reaching its ambition to replace nuclear power within a decade.

“The German government is running the German solar industry into destruction,” Hans-Josef Fell, a Green Party lawmaker and one of the inventors of Germany’s renewable energy subsidy system, said April 17, adding that he’s concerned about more “insolvencies, plant closures and job losses.”

Germany led industrial nations in promoting renewables since 2004 with the first above-market rates for solar energy. It prompted the U.S., Britain and Japan to follow with similar initiatives aimed at generating “green jobs.”

In the United States, President Obama’s ambition for a “Sputnik moment” spurring renewables has crumbled into partisan bickering about whether he was right to subsidize Solyndra before it failed. That’s halted debate on tax credits that wind turbine makers rely on, leading Vestas Wind Systems to threaten 1,600 jobs in the U.S. The concerns about green jobs also are resonating in Britain, suffering its first double-dip recession since the 1970s.

“As major economies face tougher fiscal conditions, indications suggest growth is slowing” for renewables, British Energy Secretary Ed Davey said as ministers from 23 nations met in London last Wednesday. “New industries could suffer.”

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