London (Platts)--4Jun2007

The International Energy Agency Monday praised Germany's energy policies
but also urged the German government to reconsider the phase-out of nuclear
power, the agency said in a statement.

     The IEA's "Germany 2007 Review" said Germany promoted sound, sustainable
energy policy in Europe and around the world but losing the nuclear option
would have significant impact on energy security, economic efficiency
and environmental sustainability.

     The IEA urged the country's government to reconsider the phase-out of
nuclear power and to focus on energy market reform and climate policy.

     Claude Mandil, executive director of the IEA, said: "As one of the
largest energy markets in Europe and the third largest economy in the IEA, few
countries have quite the same impact on European or even global energy
policy."

     But the report warned that "eliminating nuclear from the supply portfolio
will reduce supply diversity, increasing reliance on energy imports,
particularly natural gas, which is not diversified enough."

     The IEA said that shutting down productive assets before their useful
lifetime would also impact economic efficiency, requiring additional near-term
investments in new capacity that could otherwise be avoided. "[G]eneration
from nuclear power is free of greenhouse gas emissions [and] could
certainly make up some of the resulting gap, there will be greater reliance on
carbon-emitting fuels," it said.

     Germany's previous government passed a nuclear phase-out law in 2002
forbidding the construction of new nuclear plants and limiting existing ones
to an average life-span of 32 years.

     The IEA also urged Berlin "to introduce separate independent system
operators to manage transportation assets so that all market participants--
including existing and potential new entrants--play on equal footing and help
drive competition."

     The report said independent system operators for natural gas and
electricity networks "do not require ownership unbundling," but do provide the
right incentives for companies to operate competitively.