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Europe's top court deems German nuclear fuel-rod tax legal

The European Union's highest court has ruled that Germany's tax on nuclear fuel is not incompatible with EU law. Germany's environment minister has welcomed the decision and has hinted that the law could be extended.

Thursday's decision responded to a series of questions forwarded to the Luxembourg-based Court of Justice by the Hamburg Finance Court, where Kernkraftwerke Lippe-Ems, which operates the Emsland nuclear power station in northern Germany, had filed a legal challenge to the levy.

"By today's judgment, the Court of Justice replies that EU law does not preclude a duty such as the German duty on nuclear fuel," the Court said in a press release.

German Environment Minister Barbara Hendricks welcomed the news, saying the ruling was a "good argument for a possible extension of the nuclear tax until the end of the operating life of the last German nuclear power plant." Currently, the tax, originally introduced in 2011, is scheduled to expire in 2016.

On the other hand, the decision is a blow to the hopes of Germany's top three energy producers, E.ON, RWE, and EnBW, of recovering and estimated 5 billion euros ($5.67 billion) in tax that they have already paid.

The judgment didn't come as a major surprise, four months after

an adviser to the European Court

issued a nonbinding opinion, in which he also found that the tax did not breach EU law.

Despite the ruling, however, the power corporations, which argue that the tax is illegal as it gives producers of other sources of electricity an unfair advantage, have not completely given up hope.

A challenge has also been filed at Germany's top court, the Federal Constitutional Court in Karlsruhe, which could still rule that the tax is illegal. It is expected to hand down a decision by the end of the year.

Backtrack on a reversal

The tax, which technically applies to spent nuclear fuel rods, came into force at the start of 2011, after Chancellor Angela Merkel's conservative government had reversed a plan implemented by the previous Social Democrat-Greens government, led by Gerhard Schröder, to phase out nuclear power.

The changes would have allowed German nuclear power producers to keep their plants open for as many as 14 years longer than under the Schröder plans. However, Merkel's government back-tracked on the extension later in 2011, in light of the Fukushima nuclear disaster in Japan - but declined to revoke the tax. This is when the nuclear companies first cried foul, saying that

forcing them to shut down by 2022 would cause them to lose billions

of euros.

pfd/kms (AFP, dpa)

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