Merkel said she would push through with the legislationImage: AP
June 23, 2010
German energy firm heads are meeting Chancellor Angela Merkel on Wednesday to air their grievances over a proposed tax on fuel elements that would cut into their profits.
The talks between the German Chancellor and the bosses of the nation's four top energy companies - EoN, RWE, EnBW and Vattenfall - promise to be lively. At issue is the controversial proposal to introduce a tax on nuclear fuel cell elements at a rate of 1.5 euro cents (1.8 dollar cents) per kilowatt hour.
The levy, which was put forward earlier this month as part of an austerity package to reduce Germany's budget deficit would generate 2.3 billion euros of annual government revenue. But the idea has met with earnest resistance from the major players who claim it would cost them too dear.
In an interview with the Frankfurter Allgemeine Zeitung newspaper on Wednesday, Chairman of Vattenfall Europe - subsidiary of Swedish giant Vattenfall - Tuomo Hatakka said the proposed charge would amount to more than 100 million euros of lost revenue annually.
"We would have to take it from our profits," he said. "If it remains the case, then we must test whether it is legally tenable," he added, suggesting that there was a willingness to take legal action should the tax be implemented.
Time for action
Germany's Finance Minister, Wolfgang Schaeuble told the business magazine Wirtschaftswoche that the tax had been carefully deliberated and was indisputable.
"After all, the profit margins in the nuclear power sector are so high that a tax on fuel cell elements would affect those margins and not the cost of fuel for consumers."
But energy corporations could make waves with the threat of a price hike in a bid to keep the cost of any new charge low.
At the other end of the spectrum, Greenpeace has called for a higher tax of 2.5 cents, which it says would be commensurate with the increased price of electricity resulting from emissions trading.
Speaking ahead of the meeting, Andree Boehing, energy expert with the environmental group, said a nuclear levy was long overdue. "Nuclear companies earn billions with their dangerous power generation, but expect civilians to foot the bill for their radioactive legacy."
Other anti-nuclear campaigners welcome the proposed tax, which they say the German energy giants can easily stomach.
Phase out versus extension
The proposed fuel element duty is not the only topic on the agenda for Wednesday's meeting. The other main talking point is a proposed extension of the lives of some of Germany's nuclear power plants.
Merkel and her Free Democrat (FDP) partners are keen to change a law passed some ten years ago by the then Social Democrat (SDP) and Green party coalition. Under the terms of the legislation, nuclear power would be phased out in Germany by 2020.
But the chancellor says she is determined to let certain plants continue operating for longer. In an address to the Chamber of Commerce in Berlin on Tuesday, Merkel said it was crucial that Germany ensure it can meet the nation's energy needs.
"We are and we want to remain an industrial country," she said.
The government has been at pains to stress that there is no correlation between the proposals on Wednesday's agenda.
In conversation with the dpa news agency, Christian Ruck, Vice Chairman of the Christian Socialist Union parliamentary group said "fuel cell element tax is one thing and a fund for climate protection from the extra profits is another."
But the Green party has expressed outrage at Merkel's plans to reverse legislation brought in under their watch.
"If they try to cheat and circumnavigate the Bundesrat (upper chamber of parliament), we will come face to face at the constitutional court in Karlsruhe," Green party parliamentary leader Renate Kuenast told German television.
But getting around the Bundesrat, where the coalition lost its majority after a poor performance in recent regional elections is precisely what Merkel wants to do.
As things stand, the justice department is currently working out how long an extension could be without requiring a Bundesrat ballot. The figures being thrown about range from four to 28 years. The variants will be set out in the government's energy concept which is due out at the end of August.
Author: Tamsin Walker (dpa/Reuters/AFP) Editor: Andreas Illmer