Germany plans tax relief to raise energy efficiency

Germany plans 1 billion euros ($1.3 billion) in tax concessions to improve the energy efficiency of buildings and lift sales of electric cars, in an action plan to help Europe's biggest economy meet CO2 emissions targets, a policy document showed.

Despite a shift to renewables, Germany's CO2 emissions are rising partly due to a move away from nuclear power, and ministers have warned it risks missing its goal of reducing emissions by 40 percent by 2020 compared with 1990 levels.

Chancellor Angela Merkel's cabinet will meet on Dec. 3 to agree a range of proposals to help make up the gap, estimated by ministers to be around 7 percent, including measures to increase energy efficiency. Other options could include removing some coal generation capacity.

Under an outline of a national action plan seen by Reuters on Wednesday, 1 billion euros in tax relief will be available between 2015 and 2019 for renovation work to boost buildings' energy efficiency. An existing programme of low-interest loans from the KfW state development bank for renovation work will increase by 200 million euros initially to 2 billion euros a year.

In addition, owners of electric company cars will be able to offset half the cost of the vehicle against tax in the year it is bought from 2015.

The government plans to have 1 million electric cars on German roads by 2020, but some critics say the goal looks unrealistic.

Ministers are at odds over whether to take measures to reduce the country's reliance on coal-fired power stations run by the likes of utilities RWE and E.ON. Coal currently accounts for about 45 percent of Germany's power generation, with renewables accounting for around 25 percent.