Opposition fuming over secret nuclear deal

Wednesday, September 22, 2010

The German opposition has reacted angrily over revelations that the government, as part of its decision to extend the life of nuclear power in Germany to the mid 2030s, struck a deal with the nuclear industry to shield it from unfavorable future political decisions.

German Chancellor Angela Merkel in a previously unreleased memo assured the country's four main utilities that government-imposed nuclear safety upgrades would be capped at $640 million per reactor.

The memo, leaked Thursday, also promises that the new nuclear agreement will include provisions to make it hard for future anti-nuclear governments to reverse the decision to keep nuclear in the mix. A previous deal, struck by an anti-nuclear government and the industry in 2000, foresaw the closure of all reactors by 2021.

Germany's 17 reactors will remain online for an average of 12 years beyond their planned phase-out deadline in 2021 as a bridge technology until renewables are ready to take over completely, Merkel revealed this week following months of negotiations inside her government.

Opposition lawmakers are fuming over the new deal with the utilities Eon, RWE, EnBW and Vattenfall Europe.

Keeping it secret is "the new high point of the government's tricks and pleasing of lobbyists," Ulrich Kelber, a senior official with the opposition Social Democrats, told German business daily Handelsblatt. The government "not only makes big energy policy mistakes, but also damages democracy."

The government released the memo on its Web site a few hours after it was leaked.

The Green Party has claimed the reactor cost cap sacrifices safety in a bid to please the industry.

The memo says if safety upgrades cost more than $640 million, the utilities will get a break from a fuel-rod tax intended to compensate the government in return for longer reactor running times, which will hand utilities an estimated $5 billion to $9 billion of additional profits per year.

The decision is part of a major energy policy strategy paper the government presented to the public after marathon talks Sunday in the chancellor's office. The strategy update, long called for by energy experts, sets out nine points to achieve "a clean, reliable and affordable energy supply" until 2050.

Struck following months of wrangling with the country's large utilities, the strategy paper includes financial commitments from the nuclear industry to support renewable energy sources and energy efficiency measures in exchange for longer running times. It also includes ambitious pledges to green the country's energy mix. Germany aims to boost the share of renewables to 80 percent of the electricity consumption until 2050, halve Germany's energy consumption
by 2050 and reduce carbon dioxide emissions by 80 percent by 2050.

The nuclear industry agreed to pay around $380 million per year to support renewables and climate protection efforts, with total contributions to amount to $19 billion, the government said. The industry agreed to pay a new "fuel rod" tax of around $2 billion per year starting in 2011. The tax is less than expected and limited to six years -- a clear negotiation victory for the utilities, observers say.

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