Germany to claw back 90% of clean power generators' earnings

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Germany to claw back 90% of clean power generators' earnings

Germany has set out a plan to claw back 90% of its earnings from clean power generators as the government seeks funding for its consumer aid package.

According to a draft law seen by Bloomberg News, the government is preparing to skim earnings above €130 a megawatt-hour for solar, wind and nuclear. Politicians are trying to reclaim some of the profits that companies like RWE AG are making from high power prices.

The windfall tax will be applied to electricity producers based on the fuel they use. Lignite plants will be taxed on earnings above €82 a megawatt hour and oil plants above €280. The measures will be in place for 10 months, from September 2022 to June 2023, and could be extended until the end of 2024.

Germany has set out a €54 billion package on November 22 that will put a cap on gas prices for companies and households from next year with more earmarked for electricity. The government expects to raise a double-digit billion-euro amount by the windfall tax, which will finance bills, as well as the aid for bills, according to officials.

The proposed level is lower than the European Commission's suggested level of €180 a megawatt hour. Renewable generators in Germany have warned that such a levy will deter investment needed to help the nation wean itself off imported fossil fuels.

The more than 200-sided law proposal, which is supposed to pass the cabinet on Friday, has already provoked widespread criticism from energy lobby groups. Andreas Jung, a lawmaker from the oppositional Christian Democrats, said the levy will suffocate renewable energy companies because they have been investing a lot of money in new technology.

The law is scheduled to pass the upper house on December 16 so that it can go into effect on January 1.

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