German consumers and business face new multi-billion cost burdens to safeguard the green energy revolution.
The party leaders of the grand coalition agreed on Thursday night to give up the controversial tax on old coal-fired power plants which was meant to reduce CO2 emissions.
In order to achieve Germany’s climate targets, the Christian Democrats (CDU) and the Social Democrats (SPD) have now introduced a mix of measures and other tax–billions. The additional costs for 2020 amount to several billion euros.
Germany’s main political parties worked out a compromise plan to cut power-industry pollution by handing a six-year lifeline to some of the dirtiest coal-fired plants.
Economy Minister Sigmar Gabriel said 13 percent of power stations burning lignite, a cheap form of coal, would be phased out by 2021 under the program. The government abandoned talks on proposals to impose a climate-change fee that the industry said would have forced mines and plants to close, threatening jobs.
The decision, which must be ratified by Chancellor Angela Merkel’s cabinet this year, boosted the shares of utilities including RWE AG and EON SE. They had been braced for more stringent measures as Germany cuts emissions in time for a United Nations deal on global warming in December.
“We consider this a great relief for RWE as the climate-change fee could have proved far more harmful to the company’s brown coal-exposed power generation portfolio,” Tanja Markloff, an analyst at Commerzbank AG who upgraded RWE to buy Thursday, said in an e-mailed note.
RWE surged as much as 6.4 percent, the most since January, and EON by 3.7 percent, making them among the biggest gainers on Germany’s benchmark DAX index.