September 6, 2010 11:51 am

German groups agree €30bn nuclear deal

 
An effigy of Angela Merkel during a rally©Getty

An activist wearing an effigy of Angela Merkel protests outside the chancellery in Berlin, where the cabinet was meeting on Sunday to discuss the plan

Germany’s four big power companies are to pay the Berlin government a total of €30bn to extend the phase-out of the country’s nuclear power stations by up to 12 years.

“These are big sums that are going to be generated for the state,” economics minister Rainer Brüderle said on Monday, only hours after the government agreed on a complicated deal with the nuclear industry.

According to officials, Germany’s 17 nuclear power stations will extend their lifetimes from 32 to about 44 years, compared with an international average span of 60 years.

Chart: Germany's sources of electricity

In return, the power generators Eon, RWE, EnBW and Vattenfall will pay a nuclear-fuel rods tax of €2.3bn until 2016, a charge that will turn into a contribution to fostering renewable-energy sources in the years after.

On top of the tax, the four power companies will pay an annual €300m over the next two years and an annual €200m from 2013 to 2016 into a fund which will invest in renewable energy, according to officials in Berlin.

With much of this money earmarked for investment in renewable energy, chancellor Angela Merkel pledged Germany’s energy sources would “become the most efficient and environmentally friendly in the world”.

The power companies’ shares had suffered over the past months as investors feared meagre lifetime extensions and extra tax burdens. But Eon shares gained 3.7 per cent in early trading, while RWE stock rose 2.8 per cent.

Agreement was reached late on Sunday after chancellor Merkel had spent the day meeting various cabinet colleagues, aimed at finding a compromise package to satisfy all in her fractious coalition.

Almost a decade ago, under the Social Democratic and Green party coalition of Gerhard Schröder, the chancellor, Germany set out plans to close the country’s nuclear power stations by early next decade.

Ms Merkel’s government pledged to unwind that deal, but ran into internal conflicts on the length of the extension that should be offered. Pro-business voices backed the 20 years demanded by the power companies.

But Norbert Röttgen, environment minister and a rising star in the chancellor’s Christian Democratic Union, had called for an extension of just eight years, making the issue a test for Ms Merkel’s leadership skills.

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