Sustainable Energy

Energy firm E.ON calls for a CO2 tax in Germany

Key Points
  • Johannes Teyssen says a "better and fairer energy transition" is possible.
  • As a country, Germany is looking to increase its use of sources such as wind and solar.
Investors will decide what the right price for E.ON's stock is, CEO says

The CEO of major utility E.ON called for a new carbon tax in Germany on Tuesday, stating that a "better and fairer energy transition" was possible.

The tax would be 35 euros ($39) per metric ton of emissions that result from the use of fossil fuels for power generation, transport and heating. Authorities in Germany are currently in discussions about such a tax, according to Reuters.

In a printed statement issued at the German firm's annual shareholders meeting on Tuesday, CEO Johannes Teyssen said that the levy would generate 25 billion euros in tax revenues for the German Finance Ministry.

As a country, Germany is looking to increase its use of sources such as wind and solar whilst at the same time move away from nuclear power. In 2017, renewables made up 33.3% of gross electricity generation, with wind power, biomass and solar photovoltaics leading the way.

Teyssen explained that while electricity in Germany had become "increasingly green" the conversion of its "entire energy system" was supposed to be financed by customers through electricity prices. "As a result, clean electricity has become more and more expensive relative to dirty fossil fuels," he added. Customers with lower incomes were financing the country's energy transition, he said.

Teyssen said that the business was "obviously not interested" in burdening customers with more taxes, fees and levies. "We're proposing that in the future the annual cost of Germany's Renewable Energy Law — currently around 25 billion euros — should be financed by the federal budget with the revenues from the carbon tax," he added.

Teyssen added that Germany's electricity tax should be reduced, which he said would cut electricity prices "by almost 9 cents per kilowatt hour."

E.ON is in the middle of a major asset swap with another German utility, RWE. Under the terms of the deal, which was announced in March 2018, RWE will transfer its stake in green energy business Innogy to E.ON. In turn, RWE will take on the renewables businesses of both E.ON and Innogy, as well as other assets. At the beginning of March, the European Commission opened an in-depth investigation into E.ON's plans to acquire Innogy.

In an interview Tuesday, Teyssen told CNBC's Annette Weisbach about the deal's progress. "We already have some approvals in hand for… RWE acquiring (the) renewables business and the participation in us, the more complex part is just in the thorough investigation, but we see it … making progress, so no specific worries," he said.