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State Aid | 28th April 2021

The Commission’s doubts on the State aid compensations for the closure of LEAG and RWE lignite plants in Germany
State Aid
State aid for a decarbonised Europe
Fossil fuels
Germany

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The Commission’s doubts on the State aid compensations for the closure of LEAG and RWE lignite plants in Germany

Legal Briefing

On 21 April 2021 the Commission released the full decision opening investigations onto the State aid compensations for the closure of lignite plants in Germany. The decision preliminary confirms our assessment that the closure compensations are State aid and that their proportionality to the actual foregone profits of the plants, that they are meant to cover, is highly doubtful. In particular the Commission doubts that Germany’s projections of the lifespan of lignite plants until 2061 are any realistic given the EU climate ambitions and recent developments of the power sector, in addition to the need to upgrade the plants to mandatory environmental standards overtime.

Moreover, Germany must still provide a number of crucial information on how the foregone profits of the plans and rehabilitation costs of the mines were calculated, how CO2 prices increases an other market factors were factored in.

This legal briefing includes a basic description of the planned compensations, the next procedural steps of the State aid procedure and our preliminary analysis of the Commission’s reasoning. It does not constitute legal advice but is meant to inform stakeholders about the legal doubts the Commission expresses on the compensations and what elements still need to be substantiated by the German authorities for demonstrating that the aid can be compatible with State aid law.

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