The driving force behind Germany's Energy Transition is the Renewable Energy Law (Erneuerbare-Energien-Gesetz). This adds a levy on top of consumers' electricity bill to support renewable energies. It has been seen by some, such as Fritz Scharpf as a success story for "positive" EU integration, paving the way for other countries to implement similar schemes, without receiving reprisals by the Commission. The law's legitimacy was proved in 2001, when the subsidy aspect of the levy attracted the attention of the EU Commission under competition law. The political scientist Fritz Scharpf said that the law, in the Commission's eyes, was about as "bad as it could be", as it "amount[ed] to a restraint to trade... [and] discriminates against foreign suppliers", but despite this, the ECJ ruled in its favour (C-379/98). Germany's Renewable Energy Law showed that the EU's environmental commitments could take priority over competition concerns.
One aspect of the Renewable Energy Law, however, has remained controversial. This is Section 41, which allows certain companies to apply for an exemption from the green levies. The industry argument is that that the high electricity price would drive up manufacturing costs and threaten the competitiveness of Germany's exports.
In 2013, 1,716 firms received exemptions. The German Greens brought the exemptions into public debate, as not only the "traditional" heavy industries received exemptions, but also slaughterhouses and stocking manufacturers. There were many Germans who supported the Energy Transition, but didn't like the idea that they were subsidising companies, especially when it conflicted with their other environmental or ethical commitments.
Even among those with no particular ethical stance, there was still the idea that the burden of Germany's Energy Transition was falling unfairly on private citizens. Currently, private citizens contribute 7,2 billion euros to the Energy Transition, compared to the 6,1 billion contributed by industry. The Süddeutsche Zeitung has called this imbalance "unfair", as industries are seen as benefitting from the new sources of green energy paid for by the public. The German Association of Energy and Water Industries calculated that without industry-exemptions, the total cost of the Energy Transition would fall by 1,3 billion euros.
The exemptions become even more unfair considering the additional fact of lowering wholesale electricity prices. The increase in renewable electricity sources has lowered and levelled out the spot-market price for electricity in Germany. This means that industries with levy exemptions receive a net gain for the Energy Transition in the form of lower electricity prices. It is easy, therefore, to see how the industry exemption could be seen as unfair, but also as an indirect state subsidy.
Investigation by the EU Commission
The combination of exemptions and cheaper energy has meant that the Renewable Energy Law has once again attracted the attention of the Commission. There is a big difference between honouring environmental commitments and giving Germany's industry a free ride. The Süddeutsche Zeitung, however, suggests that the Commission and the German government have been in cahoots over the industry exemptions.
According to an inside source, the "Commission wanted to wait until the government had released the exemptions at least for 2014", which has allowed German industry another full year of exemptions. The Süddeutsche Zeitung says also that the Commission originally wanted to investigate the exemptions in summer, but proceedings were shunted back, thanks to Angela Merkel leaning on Commission President José Manuel Barroso.
This apparently explains why it has taken until December 2013 for the EU Competition minister, Joaquin Almunia, to open an investigation. Angela Merkel has already responded with concerns of a "dramatic effects on German industry", even though any outcome is likely to be quite far away.
Are industry exemptions necessary?
In the meantime, other Member States perhaps wouldn't mind seeing German industry work a little harder to keep their standing in terms of international competitiveness. However in the long-run, both private consumers and German industry are likely to benefit from the Energy Transition.
The reason is that much of the present cost of the Energy Transition is servicing the generous 20-year contracts, which were offered to encourage new green technologies such as solar. As these technologies have become cheaper, the cost of the Energy Transition should decrease as the 20-year contracts run out. This may possibly eliminate the rationale for industry exemptions in the first place, perhaps even before the Commission makes a ruling against the German exemptions policy.