London (Platts)--24Aug2007

The German government passed an energy and climate agreement aiming to
reduce the country's CO2 emissions by 36% compared with 1990 levels, the
government said Friday on its website.

     The agreement was reached during a two-day Cabinet summit intended to set
the government's agenda for the second half of this election term from
September 2007 until the next scheduled elections in 2009.

     Environment minister Sigmar Gabriel said the agreement is a "giant leap"
forward in which "direct measures and instruments were agreed" to reach this
goal.

     According to the government, the Cabinet agreed on 30 measures to reduce
energy consumption in Germany in areas such as private households, the
automobile industry and in industrial production, and economy minister Michael
Glos said "we want to become the most energy efficient region in the world."

     In the area of power production, the government plans to increase its
current renewables share of 13% to "25% to 30% by 2030" and increase its
combined heat and power (CHP) electricity production by 25% by 2020. These
plans are to be financed by Eur750 million ($1.02 billion) per year, the
government said.

     The Cabinet also decided to increase the annual budget for climate
protection from Eur700 million to Eur2.6 billion as of 2008, the government
said.

     The agreement comes after the two German ministers responsible for
energy, environment minister Sigmar Gabriel and economy minister Michael Glos,
collided publicly several times over energy issues such as the country's
nuclear phase-out plan decided by the previous government in 2002--which Glos
wants to stop--and the use of renewable energy--which Gabriel wants to
subsidize and expand more than Glos.

     This intra-governmental dispute is founded on the organization of German
ministries. Gabriel's environment ministry is also responsible for nuclear
safety while Glos' economy ministry is responsible for general energy issues
and security of supply.