Press release: 4 January 2021

Lawyers flag uncertainties in Germany's dilute coal commitment

Experts at environmental law charity ClientEarth have cautiously welcomed a confirmation by Germany’s new leading coalition that the country will work towards a 2030 coal phase-out – eight years earlier than planned.

However, the final text still controversially states that Germany will “ideally” phase out coal by 2030 – failing to specify whether an earlier phase-out will be enshrined in law or banked on via the CO₂ price.

And the agreement still contains a caveat that for the phase-out to be completed by 2030, energy supply must be secure.

Head of ClientEarth’s Berlin office Hermann Ott said: “While it is a relief to see a stated intention for a 2030 phase-out, it’s not a breakthrough – it’s just an official recognition of economic and climate realities. The real question now is if our new governing coalition truly will put in place the right legal rules and economic incentives to make sure we reduce overall energy consumption and can power Germany without sacrificing the planet. If a 2030 coal exit is contingent on security of supply, then it’s time to get serious about that supply being there, and it being clean.

“This means not pivoting to a climate-catastrophic reliance on gas. We need to see the government aggressively commit to smart ways of managing demand, and efficiency measures, as well as building out genuinely clean power – not seguing into a 20-year affair with another fossil fuel.”

The agreement also raises questions about whether the government’s new plan raises the risk of legal action by coal companies who may believe themselves to be disadvantaged by the altered timeline.

Coal companies RWE and Uniper have already sued the Netherlands this year under the Energy Charter Treaty (ECT) over new and foreseeable climate policies that will take coal offline. While the German coal phase-out was supposed to protect the government from such action – and while the ECT itself should not be used in this way in Europe – underreported loopholes in the coal phase-out agreement mean that individual shareholders could in theory bring this type of complaint.

Ott said: “If the earlier phase-out is secured in law, the existing contract with the lignite operators will need to be altered and we will be monitoring how this unfolds. But one thing is certain – a phase-out on this timeline was clearly foreseeable and should come as even less of a surprise to the companies than to anyone else.

“This government has a mandate to actively design a clean energy future and we need every company on board with that.”

Today’s agreement says that the government does not intend to pay any more in ‘compensation’ to German coal operators than previously planned. The German government is still waiting to hear from the European Commission on whether the €4 billion promised to lignite operators for the previous shutdown schedule is fit to be approved as State aid.

ENDS

About ClientEarth

ClientEarth is a non-profit organisation that uses the law to create systemic change that protects the Earth for – and with – its inhabitants. 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. From our offices in Europe, Asia and the USA we shape, implement and enforce the law, to build a future for our planet in which people and nature can thrive together.