Renewable Sector Wary of CDU Promises

When the conservative union comprised of Christian Democrats (CDU) and their Bavarian sister party, the Christian Social Union (CSU), presented their election platform, the details of their intentions as to Germany's energy policy were sketchy at best.

In a much-anticipated speech at a recent conference sponsored by the German Electricity Association (VDEW), CDU leader Angela Merkel left many delegates from the renewable energy sector scratching their heads. She announced that a conservative-led government would continue to focus on renewables, but introduce "a number of corrections to the course" taken by the Social Democratic-Green governing coalition. In particular, she said, the conservatives would re-think the "economically irresponsible" subsidies to the renewables sector.

"It's still unclear to me what to expect from Ms. Merkel," said Ralf Bischof, director of the German Wind Energy Association, after Merkel's speech. "She said the CDU would still support renewables, but not how."

Merkel's speech received sufficient applause though, due to the large number of representatives from the conventional energy sector in the audience, who were likely relieved to hear that the CDU and CSU envision an energy supply from a wide array of sources, including oil, coal, gas and nuclear energy. Renewables should make up 12.5 percent of the energy supply, but receive fewer subsidies.

Additionally, the conservatives have said they would put the brakes on the nuclear phase-out introduced by the Greens, allowing the country's atomic reactors to continue operating past the 2020 deadline. Merkel's reasoning was purely economic. If Germany is no longer active in nuclear power, she said, then it would have no influence on the international market when it comes to exporting nuclear technology.

"In my view, an ideologically motivated nuclear phase-out does not reflect economic demands," Merkel said, citing the fact that countries such as India and China are expanding their nuclear energy capacities. "For me, the question is, how can Germany with its technical know-how profit from this export potential. As a patriot, I would like to see my country profit from our expertise, not watch others take the profits."

Renewables a growth sector

The Greens, on the other hand, stress the impressive growth the renewables sector has enjoyed over the past seven years of SPD-Green rule, and warn of the consequences for this booming branch should a new conservative government undo past achievements.

Last year, the renewables sector employed 130,000 people, effectively doubling the number of employees it had in 1998. Industry representatives say the goal is for 500,000 people to be working in such fields as wind, solar and hydro-power. The industry is responsible for a turnover of 11.5 billion euros ($14 billion) a year, two thirds of which flow into investments that lead to job creation. The Renewable Energy Sources Act (EEG), passed by the government in 2000, has enabled Germany to become a market leader in renewable technology and know-how, said Environment Minister Jürgen Trittin.

"The first concrete announcement the CDU made for the new election is that the energy turnaround we've achieved should be turned back again," Trittin said at the VDEW conference." I was bewildered to hear the CDU's energy policy spokesman say they didn't intend to 'destroy everything.' I'm sure voters are interested in hearing just which jobs and which companies will be destroyed by the CDU."

Indeed, share prices in solar and wind-energy companies fell by two percent on the news that Chancellor Gerhard Schröder wanted to call early elections, which pollsters say are almost certain to be won by the CDU.

But since the beginning of June, shares in the renewables sector have been steadily regaining lost ground and more. Shares in solar energy firms have increased by around 50 percent on average, reported the Frankfurter Allgemeine Zeitung. Companies that build wind energy power stations, after watching their shares take a beating last year, are also reporting improved performance as of late.

Investors remain optimistic

Investors in the renewable energy sector don't seem to be unsettled by the potential change of government. That could have something to do with the fact that the CDU has signaled it won't introduce a new subsidy model for the renewables sector until the end of 2007 at the earliest. But there is perhaps enough confidence that the sector will continue to grow regardless of which government is sitting in Berlin, as international pressure to cut harmful emissions and reliance on some forms of energy -- oil, for example -- increases.

"The CDU has always said it intended to continue the expansion of renewables, so the goal is not at issue," Johannes Lackmann, president of the German Renewable Energy Foundation (BEE) said. "We expect a clear statement from Angela Merkel so that there won't be uncertainty. We want to discuss the most efficient way to move forward with renewables, but the way itself must not be put in question."