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ENERGY

German government moves to ramp up wind power

The German government approved a draft law on Wednesday aimed at covering two percent of the country's land area with wind turbines by 2032, by setting fixed regional targets and easing some administrative burdens.

Wind turbines in Brandenburg
Wind turbines in Brandenburg. Photo: picture alliance/dpa | Patrick Pleul

The push to accelerate the expansion of wind power comes as Germany is scrambling to wean itself off Russian fossil fuels following the war in Ukraine.

“Independence from fossil energies and from Russian fossil energies must be advanced at full speed,” Energy Minister Robert Habeck told reporters.

The draft law adopted by Chancellor Olaf Scholz’s cabinet still needs to approved by parliament.

The goal is for Germany’s 16 states to collectively dedicate two percent of the nation’s surface area to wind power generation by the end 2032 — up from 0.5 percent currently.

READ ALSO: Germany races to stockpile gas before winter

The installation of wind turbines regularly runs into “not in my backyard” resistance in Germany and objections from residents have often blocked such projects in the past, as have concerns about endangering local wildlife.

Habeck said the proposed legislation would take away some of the leeway that regional governments currently have, and force them to abide by fixed targets that vary according to a state’s size and specific criteria such as wind conditions and areas reserved as nature protection zones.

Under the bill, most states would have to set aside 1.8-2.2 percent of their land for wind turbines, while the city states of of Berlin, Hamburg and Bremen would only have to reach a 0.5-percent target.

Should regions fail to meet the objective, the federal government could override local rules on maintaining a minimum distance between homes and windmills. 

‘Concerns’

Regional states unable to meet their target would be allowed to negotiate with other states that they build more wind turbines to make up for the difference, in return for financial compensation.

The federal government also pledged to simplify species protection rules in an effort to remove another frequent hurdle on the path to more wind turbines.

Habeck said he understood the proposed measures would be met with opposition or even fear in some regions, but “there is a difference between taking concerns seriously and allowing those concerns to become a political blockade”.

Scholz’s Social Democrat-led government, which also includes Habeck’s Green party and the liberal FDP, aims for Europe’s top economy to get 80 percent of its electricity from renewables by 2030.

After years of increasing the share of renewables in its energy mix, the proportion of renewables fell last year for the first time since 1997, to 42 percent compared with 45.3 percent in 2020.

READ ALSO: Bavaria demands share of revenues for residents living near wind farms

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ENERGY

Germany plans to slash VAT on gas bills to seven percent

The EU Commission has blocked plans to dispense with VAT on gas bills. Instead, Germany will drop the tax rate from 19 to just seven percent.

Germany plans to slash VAT on gas bills to seven percent

Following the EU Commission’s rejection of a simple VAT exemption for the new gas levy, the German government has announced plans to slash the VAT rate to seven percent to ease the pressure of rising energy costs on households. 

The step will relieve gas customers significantly more than they were burdened by the state gas levy, Chancellor Olaf Scholz said on Thursday.

The SPD politician said he expected the companies to pass the tax reduction on to consumers directly. “This is another step towards relieving the burden,” he added.

He also reiterated a pledge to deliver further relief measures for households in autumn. 

“The question of social justice is decisive in order for the country to remain united in this crisis,” Scholz said.

To ease the weight of the forthcoming gas levy, the government had originally wanted to remove the obligation to pay 19 percent VAT entirely.

However, Brussels confirmed that scrapping VAT completely would be impossible under the EU’s strict competition laws.

“In principle, there is no possibility of an exemption from this tax,” Commission spokesman Danny Ferry told Tagesschau on Wednesday. “We are in very close contact with the German government to find solutions here that will benefit people in Germany and have the same effect in the end.”

READ ALSO: What is Germany’s new gas ‘tax’ and who will pay it?

Earlier in the week, Trading Hub Europe had revealed that the gas levy would be set at 2.419 cents per kilowatt hour of energy. According to initial estimates, a one-person household with an annual consumption of 5,000 kilowatt hours would see their bills rise by €121 euros without VAT due to the levy.

For a family household with an annual consumption of 20,000 kilowatt hours, the additional costs without VAT would be around €484 per year.

With the full amount of VAT included, the real cost of the levy would have risen to 2.879 per kilowatt hour of energy.

The tax cut will run until the end of March 2024, the same time the gas levy is due to expire.

Criticism of the levy

The levy is intended to compensate gas suppliers for their additional costs in light of Russia’s war on Ukraine and subsequent weaponisation of the energy crisis.

So far this year, German gas giant Uniper has posted around €12.3 billion in losses due to the scarcity of cheap Russian gas and the need to top up gas supplies elsewhere at a premium.

The gas levy is part of a rescue package for these struggling energy companies, but the plan has been criticised for not spreading the burden more evenly across society.

READ ALSO: EXPLAINED: How much will Germany’s gas levy cost you?

According to Professor Martin Booms, director of the Academy for Social Ethics and Public Culture in Bonn, a fairer way to bail out the gas firms would be through taxation.

The levy is intended to prevent the “systemic collapse of the gas supply”, Booms told WDR. This concerns the whole of society – not just gas customers “who happen to be unlucky enough to be in a rented flat that is heated with gas”.

For this reason, Booms considers taxation to be a more just solution.

“If everyone participates – namely by paying taxes – the burden is lower for each individual,” he said. “That is a very big advantage. Especially for those who are hit the hardest.”

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