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ClientEarth Communications

24th January 2019

Fossil fuels
State Aid
Clean energy

Lawyers alert EU authorities as €1.6bn German carbon reduction scheme stalls

Environmental lawyers ClientEarth have called on the European Commission to put Germany under scrutiny after it missed the legal deadline to report on whether its €1.6 billion ‘lignite reserve’ scheme was successfully cutting carbon.

The scheme was devised to ensure certain power plants that burn lignite, the dirtiest form of coal with high CO2 emissions are ‘mothballed’ by a certain date and closed after a four-year period.

Over six months beyond its final legal deadline, the German Federal Ministry for Economic Affairs and Energy has failed to publish an evaluation of the actual carbon savings to date. No additional plans on how to meet the carbon savings target have been agreed either - despite legal requirements as part of the subsidy agreement to do so.

Recent government estimates suggest the scheme could actually fall short of the legally required CO2 reduction of 12.5 million tonnes. This has wider implications for Germany’s overall 2020 climate targets - namely reducing CO2 emissions by 40%.

Head of ClientEarth’s Germany office, Prof Dr Hermann Ott, said: “The lignite reserve is a costly way to guarantee CO2 cuts - so it should at the very least achieve its objective. But the trouble is, we do not know if it is delivering what it set out to - €1.6 billion is a staggering amount of money to commit for an unknown outcome. If the promised climate benefits are not being delivered, it means Germany has simply poured another billion Euros into lignite.”

Financial support for the lignite reserve was approved by the European Commission, on the basis that the environmental benefits would be considerable.

Prof Dr Ott added: “The European Commission needs to look into the issue. That’s why I have written a letter to Commissioner Vestager.”

The action comes as media reports on the ‘coal commission’ indicate that the coal phase-out in Germany will pour even more money into the dying industry.

According to the lawyers, the government’s breach of the law on the lignite reserve also raises questions for the broader coal phase-out.

Prof Dr Ott said: “This provides some lessons for future legislation to protect the climate. We need a legally binding coal phase out law with clear dates and milestones and without loopholes - and as part of this law, there must also be an agreement on penalty measures to take if phase-out milestones - like individual closures - are not met. This could be a requirement to pay back subsidies, for example.”

Germany’s ‘coal commission’ is due to decide on a sunset date for coal by February 1st.