Press release
Germany's €35.2 billion gas subsidy plan approved despite unresolved State aid concerns
02/09/2026
ClientEarth has today warned that the European Commission's approval [1] of a German policy to invest billions in a scheme to support gas power plants raises serious concerns over the inconsistent application of EU State aid rules, and risks setting a concerning precedent for future fossil fuel subsidies in the power sector across Europe.
Stéphanie Nieuwbourg, lawyer at ClientEarth, said:
"Today's announcement is astonishing. Based on the legislation adopted by Germany, we do not see how the Commission could conclude that this measure complies with its own State aid rules.
“We will need to see the published decision before understanding how the Commission reached its conclusions. But these rules are crucial to ensuring a level playing field, for the benefit of consumers and a clear path towards a cleaner energy system."
ClientEarth filed a state aid complaint against the German government’s plan to make this investment under a “capacity mechanism for security of supply” in November 2025 [2]. ClientEarth subsequently made a detailed legal submission to the Commission in May 2026 [3], after publication of a draft law containing the security of supply mechanism, known as the “StromVKG”. That submission concluded that the scheme failed to comply with key requirements of EU State aid rules and energy laws.
State aid rules aim to prevent unfair government support to selective businesses and sectors. Here, Germany’s support for fossil gas plants threatens to give the fossil fuel industry favourable market conditions over cleaner and often cheaper alternatives, such as renewables, batteries, and flexible energy use. While Germany made limited amendments before the law was adopted on 9 July 2026, those changes did not address the core legal concerns identified by ClientEarth.
ClientEarth warned that the decision could have implications well beyond Germany, as several Member States are currently considering similar security of supply mechanisms.
Nieuwbourg added: "Allowing new harmful fossil gas subsidies in the power sector in Germany risks opening the door to further harmful fossil gas subsidies across Europe under the guise of security of supply."
"Sinking up to €35.2 billion into new gas generation takes a woeful step in the wrong direction, towards worsening climate effects and rising costs for consumers, who will be paying for these plants until 2045, the same year they are finally supposed to be climate neutral."
ClientEarth will examine how the Commission approved the scheme despite:
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the scale of the capacity mechanism not being justified by Germany's security of supply needs;
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more appropriate and less distortive alternatives capable of delivering security of supply seemingly not having been considered;
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the cost to consumers, of up to €35.2 billion in total, being approved, without any decision on how that cost will be shared;
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the measure appearing to breach EU electricity market legislation
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the significant distortions of competition created by favouring large gas-fired power stations and incumbent market players over cleaner and more flexible alternatives, for instance, demand-side flexibility and smaller, aggregated assets being excluded from the first and largest auctions; and
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the scheme's weak decarbonisation requirements to run the plants climate neutrally only by 2045 – the year the final subsidy payment falls due - seems incompatible with the EU's climate objective.
ClientEarth lawyers also expressed disappointment with the timing of the approval process, due to the lack of transparency and ample opportunity for public scrutiny.
Nieuwbourg said: "The Commission has only now signalled its approval – days before the first tenders under the scheme are to close – while Germany adopted the StromVKG in early July. Further, because the decision has not been published, the public has no way of scrutinising the Commission’s reasoning before the first auction round closes."
ENDS
Notes to editors:
About ClientEarth
ClientEarth works in over 60 countries across Africa, the Americas, Asia-Pacific and Europe. We shape, implement and enforce the law, to build a future for our planet in which people and nature can thrive.
We are tackling climate change, protecting nature and stopping pollution, with partners and citizens around the globe. We hold industry and governments to account and defend everyone’s right to a healthy world.
About the StromVKG
The German government presented its draft “Strom-Versorgungssicherheits- und Kapazitätengesetz” (StromVKG) in April 2026. It aims to ensure Germany's future electricity security by creating a capacity market and incentivising investment in dispatchable power generation capacity, which mostly consists of fossil gas power plants. The StromVKG is the successor to the "Kraftwerksstrategie" (Power Plant Strategy) launched in 2024 by the previous government.
ClientEarth replied to the two public consultations organized by the German government on the State aid aspects of the Power Plant Strategy in October 2024, as well as to the public consultation on the StromVKG in April 2026.
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 that it aligns with EU objectives, including environmental and climate goals.
State aid rules allow subsidies for fossil gas projects in the power sector labeled as "hydrogen-ready" - a concept ClientEarth strongly criticises for lacking clear timelines and criteria for switching to hydrogen. Instead, it creates carbon lock-in and 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.