Is Germany the Harbinger of America's Energy Future Under Cap-and-Trade?

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energy subsidies

German industries are reeling from the high cost of energy reports the Financial Times. Energy costs more, in part, because of the post-Kyoto Protocol's European Trading scheme that aims to reduce emissions of carbon dioxide that are thought to contribute to man-made global warming. So what to do? Subsidize the energy costs that public policy has made more expensive, of course! As the FT reports

Berlin is preparing to help domestic industries overcome the economic crisis by cutting the electricity bills of the country's largest energy users….

The bulk of any relief is likely to be found by reimbursing companies for the cost of carbon dioxide emissions trading certificates that utilities currently price into their electricity bills.

Germany successfully argued at an EU summit in December that energy-intensive industries should be not be forced to buy emission permits between 2013 and 2020 because companies would otherwise shift production overseas.

Berlin now wants to go further by compensating energy-intensive companies in the intervening years.

Officials are also considering whether to reward big power consumers for their role in balancing the electricity network during peak-load periods.

But Claudia Kemfert, head of energy policy at the German Institute of Economic Research (DIW Berlin), said it was "not the government's job to subsidise the profits of energy companies".

Soon Americans may find out whether or not it's their government's job to subsidize those profits.