02 March 2021
Coal players should worry as Commission examines Germany’s promised payouts – ClientEarth
EU Competition Commissioner Margrethe Vestager has announced the launch of an investigation into the staggeringly high compensation sums Germany has promised to lignite operators as part of its national coal phase-out.
Environmental lawyers ClientEarth have repeatedly called for an examination of the €4.35bn aid package by the Commission, citing a plethora of legal issues with the arrangement.
ClientEarth State aid lawyer Juliette Delarue said: “The Commission is basing its investigation in part on whether the phase-out aligns with EU climate goals – and in our view, it concretely does not.
“We find it hard to see how the German government can justify paying barely believable sums to an industry that has long been able to see its demise on the horizon and should have planned accordingly.
“The timeline for phase-out is far beyond the timeframe that would ensure adequate climate protection across the EU. Market forces also make it clear that many plants will become unprofitable and even loss-making before that date. That means that if the EU approves this State aid, billions of taxpayers’ Euros risk being used to line the pockets of short-sighted coal executives, rather than building a genuinely clean, future-facing energy system that guarantees German people jobs and power.
"The rest of Europe is looking to Germany as it makes its way out of coal. We are heartened that the Commission is taking this step to make sure that coal phase-outs are in line with EU law and see that public money is used to best effect.”
The Commission’s investigation is based on issues with:
- How the aid was calculated and whether it is truly the minimum sum possible
- The lack of information for calculating what the adequate amount of aid would be (if any) for individual plants
- Whether coal company LEAG’s planned use of the aid as ‘mine recultivation costs’ is reasonable
Notes to editors:
ClientEarth has published several reports on the legality of the State aid arrangements around the German coal phase-out – for both hard coal and lignite.
- Letter to DG Competition – legality of State aid to German lignite operators
- The German coal phase-out: grounds of incompatibility of the compensations for hard coal plants with State aid law
- Coal phase-out compensation for LEAG: legality
- ClientEarth reaction: State aid: European Commission pauses over German lignite deals
- ClientEarth reaction: Early agreement of lignite contracts ‘unjustifiable’
ClientEarth also launched emergency legal action to attempt to force disclosure of what the compensation sums would actually be used for.
German energy giant RWE has most recently sued the Netherlands over its attempts to implement a suitable carbon reduction target.