Germany urgently needs to scale back its financial support for the development of renewable energy to contain the spiralling costs of its move to a low-carbon economy, Chancellor Angela Merkel said Wednesday.
Addressing an energy conference in Berlin, Ms. Merkel called for reducing government spending on energy like wind and solar power to keep Germany economically competitive.
She said this should take priority over reforming the European Union’s trading scheme for industrial emissions of carbon dioxide, a cornerstone of the bloc’s effort to reduce dependence on fossil fuels. The scheme has floundered amid low carbon prices.
Energy in Europe is much more expensive than in the U.S., in part because the boom in shale gas production has pushed down prices in North America, Ms. Merkel said.
In Germany, by contrast, fuel costs have climbed, the result of the country’s shift away from nuclear and fossil fuels to energy that is abundant and considered safer for the environment.
Germany promotes the expansion of renewable energy by setting prices for the power generated, regardless whether the power is needed.
This lucrative system of support has spurred a rapid expansion of the renewable energy industry, driving up subsidy costs to around 20 billion euros per year ($27 billion).
“If the renewables surcharge keeps rising like it did in recent years, we will have a problem in terms of energy supply,” Ms. Merkel said.