German nuclear tax to cost billions

Germany's nuclear tax targets utilities E.ON, RWE, Vattenfall and EnBW, funding decommissioning, waste storage and austerity goals while trading life extensions for climate policy, CO2 neutrality, and grid reliability amid a nuclear phaseout.

German energy companies are going to have to pay billions of euros each year to extend the lives of their ageing nuclear plants.

The German government has announced plans to impose taxes on nuclear power plant operators like E.ON AG and RWE AG, among others, as part of a wider national austerity plan that it hopes will save more than 80 billion euros US $96 billion by 2014.

Germany intends to phase out nuclear power at all 17 of its nuclear power plants by 2021 but the current government, under chancellor Angela Merkel, is in favour of controversial plans to extend the life of some of those facilities by between 10 and 25 years in order to reach its ambitious climate goals and ward off an inevitable energy crisis if the plants are closed on schedule. However, the government plans to tax the energy companies heavily for any proposed life extensions. According to the austerity document, the government aims to raise 2.3 billion euros US $2.77 billion a year from the nuclear tax, amounting to about 10 billion euros US $12.04 billion by 2014.

The government maintained that the nuclear tax will help offset the cost of paying for the decommissioning of older nuclear facilities, while funding the interim storage of nuclear waste from the country's nuclear waste storage facility at Asse in Lower Saxony. Roughly 126,000 barrels filled with low-level radioactive waste are stored in the old salt mine, which has started letting in groundwater and has been deemed unstable. The government also justified the nuclear tax by saying that because nuclear reactors are not impacted by CO2 emissions penalties like fossil-fuel power plants, energy companies have been making huge profits.

Germany's nuclear plants are controlled and operated by E.ON, RWE, Vattenfall AB and Energie Baden-Württemberg AG. The power plants account for 26 of the nation's energy consumption.

Earlier this year, state-owned bank Landesbank Baden-Württemberg claimed that the four energy companies stand to make profits of up to 233 billion euros US $329 billion if the nuclear plants obtain lifespan extensions of 25 years. However, the lifetime extensions have not been finalized, and according to recent reports, as Germany considers a U-turn on its nuclear phaseout they may be scaled back to 10 years to avoid public protests and a protracted political and legal fight.

A decision on Germany's nuclear future and nuclear extensions is due this fall, but it may come too late to save EnBW's Neckarwestheim 1 plant, which was due for closure this spring, and RWE's Biblis facility which faces closure this autumn. Last month, Neckarwestheim 1 was brought offline for maintenance and upgrades, and the company remains optimistic about getting an extension.

"Once again, we are investing tens of millions [of euros] in the high technical level of our plant," said Jörg Michels, the technical director of the Neckarwestheim nuclear power station. "In view of the energy concept announced for the autumn by the federal government, we assume that Neckarwestheim 1 will have additional prospects for the future."

He continued: "The federal government has already announced it is making term extensions dependent on strict German and international safety standards. Block I is ideally prepared for this. The plant not only satisfies the safety-technical requirements applicable in Germany, but also the standards required for new nuclear builds by the International Atomic Energy Agency (IAEA). In addition, last year the IAEA concluded, after an intensive audit, that Block I is a very good plant measured against international standards and could be operated for a total of 60 years."

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