Coalition Fission: Merkel's Nuclear Plan Encounters Mounting Opposition

Chancellor Angela Merkel had hoped that with a quick resolution, she could sidestep a national debate over nuclear energy. Many, though, see her new plan as a windfall for the country's power utilities. Opposition, both within her government and elsewhere, is on the rise. By SPIEGEL Staff

Photo Gallery: A Season of Anti-Nuclear Protests Photos
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It could be just like the good old days. This Saturday, thousands of anti-nuclear energy protestors, traveling on buses and chartered trains from all over Germany, plan to converge on Berlin. They'll be handing out flyers and holding up signs and banners, and making as much noise as possible. The city's residents may even see a handful of old VW buses plastered with old red-and-yellow "Nuclear power? No thanks!" stickers leftover from the 1970s, the heyday of atomic protests.

The anti-nuclear movement is up in arms over plans by Chancellor Angela Merkel's government to extend the life spans of the country's 17 nuclear power plants. Renate Künast, floor leader of the Green Party in parliament, has warned the government that the move could trigger "a major social conflict," while Sigmar Gabriel, head of the center-left Social Democrats, is threatening to launch a constitutional challenge.

Merkel had hoped that reaching a speedy decision on the nuclear issue two weekends ago would quickly resolve an unpopular issue. But she may, once again, have miscalculated. Indeed, it appears that the government's compromise will spark an even more strident debate. Governors from Merkel's Christian Democrats and its Bavarian sister party, the Christian Social Union (CSU), are already demanding corrections to the new policy, the European Commission is threatening to require a review that could take months, and environmental experts from the CDU/CSU and from Merkel's junior coalition partners, the Free Democrats, are unhappy with the new policy, which they say has made too many concessions to the nuclear industry.

Only a few weeks ago, it looked as though the heads of nuclear power companies -- led by the CEOs of two major players in the industry, Johannes Teyssen of E.on and Jürgen Grossmann of RWE -- would emerge as the losers from the wrangling over the nuclear plants. Environment Minister Norbert Röttgen (CDU) was only willing to grant a moderate lifespan extension and had developed a long list of safety requirements.

No Allies

But none of that will come to pass. Just prior to a key round of negotiations at the Chancellery two Sundays ago, Röttgen was forced into the realization that had no allies. Other important figures, including Economics Minister Rainer Brüderle, conservative floor leader Volker Kauder and Chancellery Chief of Staff Ronald Pofalla, are all opposed to Röttgen's position.

Even Foreign Minister Guido Westerwelle, who Röttgen had previously said was "irreparably damaged" has come out against the environment minister. And Chancellor Merkel, even as she was lobbying hard for new taxes to be levied on utility companies to boost government coffers, repeatedly spoke to the power company CEOs while largely ignoring Röttgen's concerns.

By early afternoon on Sunday a week ago, it was already clear that the environment minister would be forced to back down. One last time, Röttgen reiterated his proposal to require older nuclear plants to add an additional concrete shell to protect them against plane crashes. Unfortunately for Röttgen, however, experts in his own ministry had already admitted, during a meeting at the Chancellery three days earlier, that excessively high retrofitting costs would immediately render most nuclear plants uneconomical.

When the politicians parted ways at about 11 p.m., Deputy Finance Minister Hans Bernhard Beus and the power companies' chief financial officers got to work. At 5:23 a.m., they signed a workable preliminary agreement. Environment Minister Röttgen was kept out of the loop at first.

Even more damning was the coalition government's decision to keep the agreement under wraps because the negotiators were still ironing out the details. "It was stupid," says one member of the government, noting that the cloak-and-dagger approach would only spark suspicions among the public that the government had reached a secret agreement benefiting the power companies.

'A Wonderful Day'

It turns out that those suspicions were not unwarranted. The agreement Merkel reached with the utility executives last week includes substantial concessions to the industry. "Sunday was a wonderful day," an energy industry lobbyist remarked after the meeting, which promised to result in windfall profits for the utilities in the medium and long term.

Under the new agreement, the government is guaranteeing the utilities about 1.8 trillion kilowatt hours of additional electricity from nuclear plants. Depending on the price of electricity, this corresponds to anywhere from €27 billion (about $34 billion) to €64 billion in additional revenues, according to calculations by the state-owned bank Landesbank Baden-Württemberg. The utilities will pay higher taxes until 2016, but then they will begin reaping enormous gains.

There is no fixed end date for the use of nuclear power in Germany. Instead, power companies will be able to transfer kilowatt hours from old nuclear power plants to new ones as they see fit, thereby potentially extending the life spans of the new plants past the middle of the century.

Until now, Röttgen has claimed that electricity generated by nuclear plants would only be allowed to be transferred from old plants to new ones. But this isn't true. The preliminary agreement guarantees the utilities that an exemption clause will continue to apply, whereby, with the government's approval, it will be possible to keep old nuclear plants connected to the grid by borrowing kilowatt hours from new plants.

Although the utilities will soon have to pay a planned fuel rod tax, it remains unclear as to how much additional money they will be required to pay into a government fund to expand renewable energy sources. The current plan places that figure at €1.4 billion in the period from 2011 to 2016.

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Graphic: Expected additional profits for Germany's energy companies. Zoom
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Graphic: Expected additional profits for Germany's energy companies.



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