ClientEarth files EU complaint against German government's billion-euro gas investment plan

ClientEarth lawyers have filed a complaint against the German government's plan to invest billions of Euros in gas power plants – despite devastating effects on the climate, high consumer costs and readily available cleaner alternatives.  

The German government plans to invest billions of Euros of public money in additional gas power capacity, spelled out in its so-called “power plant strategy”. Lawyers warn that fossil gas used in these plants is much more harmful to the environment than the framing as a transitional energy source suggests, and continued investments further deepen the dependence on it, instead of supporting cleaner and cheaper alternatives. 

Before the power plant strategy can be rolled out, the subsidies need to be approved by the European Commission under EU State Aid rules. ClientEarth filed a complaint against the anticipated approval of the government’s current plan. Lawyers argue that the proposed German scheme violates EU State Aid rules: the plans are not necessary, proportionate nor appropriate to address the goals of decarbonisation and energy security and are highly distortive of competition towards cleaner technologies - despite the government’s claims.  

ClientEarth lawyer Stéphanie Nieuwbourg: “We’re challenging the German government’s plan to sink billion of euros into gas power plants, risking devastating climate effects and rising costs for consumers. These inefficient subsidies are breaching EU State aid rules which are in place precisely to prevent member states from making rogue decisions that go against consumer interests and the EU climate goals and use subsidies to artificially enhance the market position of fossil fuels at the expense of cleaner alternatives.”    

The German government’s claim that energy security hinges on additional fossil gas plants has been challenged by independent studies. Cost effective energy security is best achieved through prioritising a more efficient integration of cleaner alternatives such as renewable generation, storage and demand-side flexibility. The planned subsidies dampen price signals that encourage reduction of energy demand and efficient choices. At the same time, the costs of these subsidies will ultimately be passed on to consumers and will affect them for many years to come.  

The power plant strategy is also inaccurately sold as a decarbonisation solution since the gas plants will be “hydrogen-ready”. Yet, these hydrogen-ready projects cannot use hydrogen from the outset and fail to guarantee any actual future use of hydrogen, especially green hydrogen. Instead, this approach risks long-term fossil fuel dependency, undermining Germany and the EU’s climate and energy goals, and overlooks the fact that using hydrogen for electricity production is an inefficient and expensive use of a scarce resource (that can better be used in other applications). 

Earlier this month, the German government announced the latest update on the power plant strategy. It will put out tenders for subsidies for a total of 10 GW of new capacity, of which 8 GW would be reserved for gas power plants and 2 GW would be for “technology-open” capacity - less than the originally planned 20 GW total capacity agreed in the coalition agreement earlier this year. At this stage, it remains unclear when and under what conditions the European Commission will approve this new capacity, and whether more capacity will be added in the future. 

ClientEarth lawyer Stéphanie Nieuwbourg comments on this: “The problem remains: too much public money is wasted on fossil energy and false carbon-reduction solutions. The costs of these inefficient subsidies will ultimately be borne by consumers and make people less supportive of real change – a true energy transition. The EU Commission should stick to its own rules and reject this State Aid.” 

ENDS 

Notes to editors:

About the Kraftwerkstrategie 

In 2024, the German government launched its "Kraftwerksstrategie" (Power Plant Strategy) with the purpose of mainly building new, flexible fossil gas power plants. The core objectives are to ensure security of energy supply, decarbonize the energy system and support the transition to a future hydrogen economy.  The initial plan as proposed by the previous German government was to grant subsidies to build 10 GW new hydrogen-ready power plants and to modernise 2GW of existing plants in 2025 as a first step. The budget foreseen for this was 17.9 EUR billion. As a second step, a new capacity mechanism to be operational by 2028 would be developed, which would cost up to EUR 435 billion. More recent plans from the current government intend to expand the initial plan up to 20 GW of gas-fired capacity by 2030. 

ClientEarth replied to the two public consultations on the State aid aspects of the Power Plant Strategy that were organized in October 2024.  

About State aid 

State aid refers to financial support – such as subsidies, tax breaks, or interest-free loans – provided by EU Member States to companies. Such aid can distort competition within the EU's internal market. Therefore, the European Commission oversees and regulates state aid to ensure it does not unnecessarily distort the EU internal market and aligns with EU objectives, including environmental and climate goals.   

State aid rules allow subsidies for fossil gas projects labeled as "hydrogen-ready" - a concept ClientEarth strongly criticises for lacking clear timelines and criteria for switching to hydrogen. Instead, it creates lock-in, financial and external dependency risks that undermine the EU’s climate and energy goals. 

Generally, there is a lack of safeguards against environmentally harmful State aid in the EU, resulting for instance in large subsidies flowing to fossil fuels. ClientEarth therefore published a policy briefing on environmental mainstreaming in State aid control, with concrete recommendations for a consistent integration of environmental considerations in State aid policy.