The European Union has launched a probe into Germany's decade-old renewable energy law, on the grounds that it could breach fair competition rules by providing exemptions on charges to certain domestic firms.

German magazine Der Spiegel reports that EU Commissioner Joaquin Alumunia has already concluded that some of the provisions contained by Germany’s law to foster the development of renewable energy could be in breach of EU regulations, and that Brussels-based lawyers are currently in the process of scrutinizing the law.

The law was drafted over a decade ago, prior to Chancellor Angela Merkel assuming office in 2005.

Germany’s current policy seeks to increase the share of power generated by renewable energy sources to 50 per cent by 2030 and 80 per cent by the middle of the century. Chancellor Merkel has also set out ambitious plans for reducing dependence on fossil fuels and phasing out the use of nuclear energy.

EU officials reportedly believe that exemptions given to energy intensive companies in Germany  under this policy are in breach of fair competition laws.

The exorbitant cost of this slated transition has fallen disproportionately on German households, however, while around 4,500 German companies claim exemptions as part of a bid to prevent them from paying too much for energy and maintain their competitiveness on an international playing field.

The result is a tax regime which suppresses household consumption yet provides support to companies, which in turn has the effect of stifling imports and serves as a covert form of protectionism.

The International Energy Agency has also warned that the policy could have an adverse impact on efforts to popularize renewable energy, by pushed household utility bills to such heights that it sours the average consumer.

Ms. Merkel said in a television interview that Brussels had raised the issue of Germany’s renewable energy law, and affirmed her plans to amend it in the event of her re-election in September.

“We urgently need an amendment to the renewable energy law,” Ms. Merkel said to ARD Television. “There are even critical questions coming from Brussels.”

Ms. Merkel said that rising energy costs pose a major problem, and that she plans to curb generous subsidies provided to the renewable energy sector.