Germany wants nuclear exit by 2022 at latest

Germany will shut all its nuclear reactors by 2022 and plans to cut power use by 10 percent by 2020, Chancellor Angela Merkel's coalition agreed on Monday in a policy u-turn drawn up in a rush after the Fukushima disaster.

The decision, which may be even more ambitious than the nuclear exit planned when the Social Democrats and Greens were in power in 2000, as it takes eight of 17 nuclear plants offline now and six by 2021, could still face opposition from utilities.

Only nine months ago Merkel announced an extension of the lifespan of unpopular nuclear plants by an average 12 years. In March, after Japan's earthquake and tsunami, she reversed that and put Germany's entire energy strategy under urgent review.

"Our energy system has to be fundamentally changed and can be fundamentally changed. We want the electricity of the future to be safer and, at the same time, reliable and economical," Merkel told reporters on Monday.

To accompany the nuclear exit, Germany plans to cut electricity usage by 10 percent by 2020 and double the share of renewable energy sources to 35 percent over the same period, according to a government paper seen by Reuters.

Merkel did not outline further details of the plan but the government paper said Germany's goal of reducing greenhouse gas emissions by 40 percent by 2020 remained in place.

Most voters in Germany oppose atomic energy, which provided 23 percent of overall power before the seven oldest stations were shut down in March.

A disputed 2.3 billion euro a year tax on spent fuel rods will not be scrapped even as the coalition plans to go ahead with the shutdown, Environment Minister Norbert Roettgen said early on Monday after late-night talks in the chancellor's office between leaders of the center-right coalition.

"(It's) definite: the latest end for the last three nuclear power plants is 2022," Roettgen said after the meeting and before leaving on his bicycle.

Merkel's about-turn has done little to gain her support, but has drawn scorn from the opposition and within her own party ranks. Tens of thousands of people demonstrated against nuclear energy at the weekend all across Germany.

Nuclear policy is heavily disputed in Germany and the issue has helped boost the Greens, which won control of one of the CDU's stronghold states, Baden-Wuerttemberg, in a March vote.

Merkel's majority in the Bundesrat upper house, where the states are represented, vanished last year after the CDU failed to hold onto the populous North Rhine-Westphalia state. Losing Baden-Wuerttemberg, a vote held in the shadow of the Fukushima nuclear crisis, dealt another blow to Merkel's authority.

Germany's largest power provider RWE, which had suggested ending nuclear power in 2025, signaled its opposition to the deal. A spokesman for the company said the firm would keep "all legal options open."

"The end (of nuclear power in Germany) by 2022 is not the date we had hoped for," the spokesman said, declining to comment on the effect of the decision on the company's earnings.

The decision could still face opposition from RWE's peers E.ON, Vattenfall and EnBW, the other three utility companies that run the 17 plants.

German baseload power in the wholesale market on Monday rose 70 cents from Friday to 60.20 euros a megawatt hour.

"Prices must go up to account for permanently lower capacity. Neighboring Europe will have to price in the potential absence of German power in case of unfavorable supply situations," one trader said.

Shares in utilities E.ON and RWE fell 2.2 and 2.4 percent respectively at the open.

No Way Back

Some politicians had wanted a clause allowing for revision of the agreement in future. The Free Democrats, junior partners in Merkel's center-right coalition, wanted no firm date but a flexible window for exit, plus the option of bringing back at least one of the seven oldest nuclear reactors in an emergency.

"There will be no clause for revision," Roettgen said.

The coalition agreed to keep one of the older reactors as a "cold reserve" for 2013, if the transition to renewable energies cannot meet winter demand and if fossil fuels do not suffice to make up for a potential shortfall.

A massive earthquake and tsunami in March crippled Japan's Fukushima plant, causing releases of radioactivity, sparking calls for tougher global safety measures and prompting some governments to reconsider their nuclear energy strategy.

The German decision still needs to go through parliament and leaders of the opposition Social Democrats and the Greens were present at parts of the meeting to enable a broad consensus.

The coalition wants to keep a nuclear tax, which was expected to raise 2.3 billion euros ($3.29 billion) a year from this year, but so far has not been levied. With the immediate exit of eight plants it will raise less than envisaged.

It had mulled dropping the tax in return for the utilities supporting and not suing the government over an early exit.

[Source: By Annika Breidthardt, Reuters, 30May11]

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