EU Commission has doubts: Compensation for coal phase-out Violation of EU law?

EU Commission has doubts
Compensation for phasing out coal Violation of EU law?

A bucket chain excavator removes earth in the Jänschwalde open-cast lignite mine of Lausitz Energie Bergbau AG (Leag). The EU Commission has “doubts whether the compensation of the operators for lost profits can be regarded as the minimum required”. Photo: Patrick Pleul / dpa-Zentralbild / ZB

© dpa-infocom GmbH

The energy companies RWE and Leag are to receive more than 4.3 billion euros as compensation for the coal phase-out that has been decided. Now Europe’s top competition watchdogs are examining whether that was too much and whether competition is being illegally distorted.

The government’s billions in compensation to energy companies because of the coal phase-out that has been decided could violate EU law. The EU Commission announced that it had “doubts about the compatibility of the measure with EU state aid rules”.

Specifically, it is about 4.35 billion euros to RWE and Leag for lost profits and additional mining follow-up costs due to the imminent exit from coal-fired power generation in Germany. First and foremost, it is about the adequacy of these compensation payments.

“The Commission has doubts whether the compensation of the operators for lost profits, which extend very far into the future, can be regarded as the minimum required,” the commission said. The compensation granted to the plant operators for the early exit must be limited to this required minimum, said EU competition commissioner Margrethe Vestager. “The information we have so far does not allow us to confirm this with certainty.” Germany now has the opportunity to comment on the case as part of the investigation that has been initiated.

Meanwhile, RWE is calm. A spokeswoman for the group called the examinations by the EU Commission a completely normal process. “RWE pointed this out from the start.” The compensation of 2.6 billion euros is below the actual damage of 3.5 billion euros. The environmental organization Greenpeace welcomed the EU Commission’s approach. «The doubts are justified. Economics minister Peter Altmaier is not allowed to gild RWE and Leag the politically overdue coal exit », said Greenpeace energy expert Karsten Smid in the direction of the CDU minister. The Greens parliamentary deputy in the Bundestag, Oliver Krischer, made a similar statement.

In the course of the coal phase-out, the Bundestag approved a contract concluded by the federal government with the lignite operators in mid-January. According to this, Germany’s largest electricity producer RWE will receive a total of 2.6 billion euros, for the Lausitzer Leag 1.75 billion euros are earmarked.

In order to protect the climate, the generation of electricity from coal should end entirely by 2038 at the latest. Until then, the federal government wants to repeatedly review the consequences of the coal phase-out for security of supply and the development of electricity prices – because the last nuclear power plant in Germany will also be shut down by the end of 2022. However, it should also be examined whether the coal phase-out can be brought forward to 2035.


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