Monday, August 16, 2010

Merkel's nuclear energy tax plan backfires

Planned tax on nation’s 17 reactors prompts a threat by utilities to shut them down

backfireAs an idiomatic phrase, if something "backfires," it means plans for a project have not worked out and with unanticipated negative consequences. It can also mean that the plans were not thought out deeply ahead of time.

Technically speaking, a backfire is an explosion of unburned gas in the exhaust system. Instead of blowing the doors off the competition, the poorly tuned engine blows the tailpipe off the car.

This is exactly what's happening in Germany this week as Chancellor Angela Merkel struggles to save the nation's 17 nuclear reactors and simultaneously tax their profits to buffer the impacts of her government's austerity budget.

Germany's two largest utilities mounted a major campaign to push back on the idea of taxing their nuclear fuel rods to produce €2.3 billion a year or €23 billion ($2.9 billion) over the next decade.

The German newspaper Der Spiegel reports Aug 14 that the utilities threatened to shut down the reactors on their own unless the tax is replaced with a fixed contribution to a renewable energy fund. They claim the tax will severely cut dividends to shareholders and funds for capital investment though none is planned for new reactors.

Real the complete details exclusively at the EnergyCollective online now.


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DocForesight said...

"a fixed contribution to a renewable energy fund" -- sounds like the nuclear plant owners are being forced to fund their competition. Or am I reading that wrong?

Anonymous said...

I suspect they want the money to go into a fund that they themselves will manage. So the renewable projects funded by it will be their own, and the money will remain with them, rather than go to into the government's general fund. Renewable projects in turn are heavily subsidized in Germany, so these companies can expect to make a fortune off them. Left holding the bag will be the taxpayer and ratepayer.

Rich Boberg said...

I never ceases to amaze me how politicians never consider how taxes affect people's behavior. They only seem to consider how it affects the treasury. They take the simplistic approach that increasing taxes should increase the treasury while cutting taxes should reduce the treasury.