[The Vector] German Commitment to Renewables Subsidies under Strain

Plans for cuts to Germany’s solar incentive scheme provoked a stand-off earlier this month when Germany’s upper house, the Bundesrat, voted against the reductions. The government proposed cutting domestic installation incentives by 11 percent, while reducing feed-in tariffs for roof panels by 16 per cent.  The government also want to drop plans for new feed-in tariff payments for solar sites on agricultural land.

The German government argues that the falling price of solar panels means the subsidies are too large. However, solar panel firms retort that the proposed cuts are too deep and endanger Germany’s status as leader in the solar energy market.

The entire European Union is feeling the financial pressure of its commitment to reducing the threat of climate change. The European Union Commission (the Union’s Executive) had supported a unilateral commitment to reduce greenhouse gas emissions by Union countries of 30% by 2020. The original commitment was to a 20% cut in emissions by that date.

According to EU Climate Action Commissioner Connie Hedegaard, it is all a question of timing – and right now the timing is not right. “Are conditions right? Would it make sense at this moment? The answer would be no.”