WRITTEN QUESTION E-1714/97 by Hiltrud Breyer (V) to the Commission (23 May 1997)

Subject: Electricity Grid Feed Act

Renewable energy is extremely important from the point of view of protecting the environment and climate. This point was most recently acknowledged in the Green Paper on Renewable Sources of Energy (COM(96) 0576 final). Effective measures to promote renewable energy and ensure its rapid introduction into the market are therefore essential. In Germany, the Electricity Grid Feed Act has for years served as an efficient means to this end, enabling more than 1600 MW of wind power capacity to be installed within six years. The success of this legislation is incontestable, but at the same time it has met with opposition from the monopolistic German energy industry, which suddenly found itself exposed to unwelcome competition on the energy production side.

1. What is DG XI's view of the dispute about state aid in connection with the Electricity Grid Feed Act and Commissioner Van Miert's letter of 26 October 1996 to Germany's Federal Minister for Economic Affairs?

2. At what juncture, if any, did DG XI communicate its opinion to DG IV?

3. Does Directorate-General XI agree that the 'polluter pays' principle referred to in Article 130r(2) of the EC Treaty permits the creation of instruments enabling any additional costs of environmentally benign energy production to be shared among all electricity consumers, as provided for, for example, by the Electricity Grid Feed Act in Germany in the case of renewable energy?

4. What is Directorate-General XI's view of the role of renewable energy in fulfilling the European Union's climate protection obligations? Are not aid measures to promote the introduction of renewable energy into markets needed to perform this duty?

Answer given by Mrs Bjerregaard on behalf of the Commission (2 July 1997)

The Commission would point out to the Honourable Member that it acts collectively in accordance with its rules of procedure ((OJ L 230, 11.9.1993. )).

Renewable energy has a number of positive impacts on the environment which other sources of energy do not possess. Reasonable levels of subsidies are in principle in line with the polluter pays principle as long as the consumer in the long run bears the full-costs of consuming electricity. Such support is also allowed according to the Commission guidelines on state aid for environmental protection.

The German law 'Stromeinspeisegesetz' has a particular system of compensation for the additional costs of wind energy that goes from one player in the electricity industry to another. This compensation is estimated to be higher than the additional costs of electricity from new wind power plants. From an environmental perspective it is not recommendable to compensate more than the additional costs of electricity from wind power since this would imply that the consumer is not bearing the full costs of electricity generation and would therefore consume more electricity than necessary. In that sense this would run counter to the polluter pays principle. In a deregulated electricity market such aid may not be sustainable if it leads to unfair competition between domestic renewable energy and imported renewable energy such as hydropower. Other methods to make support less distortive have therefore been proposed to the German authorities.

Support to renewable energy forms part of the Community strategy for climate change. As noted by the Honourable Member, the Commission published a green paper outlining a strategy to increase the penetration of renewable energy sources ((COM(96) 576. )).