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Germany to review jobs impact of coal levy before decision

Germany will make no decision on a proposed coal levy before a review is conducted regarding possible job losses, Economy Minister Sigmar Gabriel has told energy unions in a letter seen by Reuters on Friday.

Germany is looking to safeguard its energy supply while reducing its C02 emissions by 40 percent by 2020 and exiting nuclear power two years after that.

The government has proposed penalties for the oldest and most polluting coal-fired power plants to help cut emissions.

But energy companies and German states fear the measure will damage coal generation and cost jobs. Mining unions plan mass demonstrations on Saturday in Berlin against the proposed coal levy, which union IG BCE says could put 100,000 jobs at risk.

Germany's largest power producer, RWE, and other energy groups have said the levy would lead to the immediate closure of RWE's lignite-fired power plants.

"We need certainty about the numbers and consequences," Gabriel said in the letter to IG BCE and another union Verdi dated April 24. "Nothing will be decided prior to that."

Gabriel said he had commissioned a review into the impact of the proposals on electricity prices, CO2 emissions targets as well as on the operations of power stations and mines.

"Should this in fact confirm the misgivings expressed by IG BCE and Verdi of an industry meltdown with a considerable loss of jobs, then the Economy Ministry will of course change its proposals to achieve its climate targets," Gabriel said.

In the letter, Gabriel stressed he was open to alternative suggestions on how to achieve Germany's climate goals while protecting jobs and called for a constructive dialogue.

In a sign it was open to compromise, Rainer Baake, state secretary for energy in the Economy Ministry, proposed linking the levy on C02 produced by coal plants above a certain level to the electricity price.

Under this scenario, the levy would increase when the electricity price is high and fall when the electricity price sinks below a level of 40-42 euros per megawatt hour, he said.

Sources told on Friday that Swedish utility Vattenfall was facing delays in its planned sale of brown coal assets in Germany due to concerns over the levy.

source: http://economictimes.indiatimes.com