Germany to amend law to boost wind power aid

BERLIN, March 31 (Reuters)

The German government plans wide-ranging changes to its subsidising law for renewable energy sources (EEG) including an increase in state assistance for inland wind farms, an official said on Wednesday.

Germany has had an energy subsidising law for four years but the old bill has been under review and a new draft will be put to vote in parliament on Friday.

Michaele Hustedt, energy expert for junior coalition party, the Greens, said the new draft agreed with Chancellor Gerhard Schroeder's Social Democrats (SPD) was a clear improvement.

"The EEG is the most important tool for protecting the climate," she told reporters in Berlin.

Referring to a European Union plan to reduce greenhouse gas pollution by launching a carbon dioxide (CO2) emissions trading scheme next year, she said: "The EEG law reduces CO2 emissions five times more than emissions trading."

Renewable energy sources supply eight percent of all power in Germany, which at 500 terawatt hours is Europe's leading electricity market and a proponent of pro-environmental politics including above-market payments for green energy.

But the country aims to further raise the share of renewable industries -- mainly wind and hydro power -- to compensate for the planned phase-out by the early 2020s of nuclear energy, which supplies 26 percent of total electricity.

The Bundestag lower house will vote on the new renewables law on Friday but members of the ruling coalition could make further changes to the draft before then.

Hustedt said the new law would provide more funding for energy production using the renewable biomass and would create incentives to use new, efficient technology.

Regulations limiting the renewable energy subsidies which energy-intensive firms such as steelmakers have to pay would be widened and now also cover railway operators.

The change means German rail operator Deutsche Bahn AG will not have to pay as much as before to compensate for the fact it uses more energy than some other industries.

The ruling SPD said the adjustment eased the burden on energy-intensive firms and made Germany a more attractive place to do business.

Germany's EEG renewable energy law guarantees above-market rates for power produced at sites such as wind, solar and hydro power plants. It has been under government review for months.

The new renewables draft follows protracted disputes between Economy Minister Wolfgang Clement, interested in limiting firms' costs and Environment Minister Juergen Trittin, whose ecologist Greens want to cut pollution and slow global warming.

The deal comes after a compromise between the rival ministers earlier this week on Germany's limits to CO2 emissions for the EU emissions trading scheme. The cabinet agreed to cut emissions but not by as much as Trittin had hoped.

However, under the new renewables draft law, a rule pushed through by Clement which limits subsidies to inland wind farms will be partly annulled.

Until now, only inland wind farms achieving an efficiency rate over 60 percent have received subsidies. Under the new draft all inland wind farms would receive funding, Hustedt said. Ministers originally wanted to raise the level to 65 percent.

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