German energy companies LEAG and RWE are set to receive over €4 billion for closing their lignite-fired power plants. But nobody knows how the compensation was calculated and the German economy ministry refuses to provide details, citing procedural matters. EURACTIV Germany reports.
A shadow hangs over Germany’s coal phase-out law, which is due to be voted in the German Bundestag on Friday (3 July).
Just a few hours before MPs are supposed to vote on the bill, the Higher Administrative Court of Berlin-Brandenburg rejected yesterday (2 July) an urgent motion tabled by green campaigners who requested access to the documents containing the details of the government’s deal with operators of lignite power plants.
Referring to the German Environmental Information Act, environmental lawyers ClientEarth and the internet platform FragDenStaat, wanted to know what criteria was used to calculate the compensation offered to energy firms in exchange for their commitment to close the country’s remaining lignite-fired power plants.
The deal was negotiated behind closed doors by the economy ministry led by Peter Altmaier (CDU) together with energy companies RWE and LEAG.
But the ministry refused to provide the details of the deal, arguing that the obligation to provide information did not apply to documents which are part of a legislative process, an argument the court agreed to yesterday.
The Court of First Instance informed campaigners that “this dispute must be resolved calmly and not in a summary procedure,” said Arne Semsrott from FragDenStaat, the internet platform dealing with freedom of information requests.
ClientEarth is also upset about the ministry’s secrecy. “It seems as if the responsible minister, Peter Altmaier, does not want to give the public any insight into his agreements with the coal lobby under any circumstances and is now delaying the release of the documents until the coal law is passed – and the money bag is closed,” said the head of the organisation’s German office, Hermann Ott.
Too much taxpayer’s money?
The compensation offered to power plant operators, which amounts to €4.35 billion in total, is highly controversial. The Öko-Institut, a think tank, estimates that the sum could be overestimated by up to €2 billion.
Asked about this, Germany’s environment ministry affirmed that the economic situation of the power plants had been closely examined by a consortium of independent auditors.
Among other things, the auditors “gained access to internal company documents that the operators had made available to them in on-site meetings,” a ministry spokesperson told EURACTIV. The ministry will soon publish an expert opinion on this – after the law has passed parliament, the spokesperson added.
In January, German magazine Der Spiegel reported that the LEAG group had planned to shut down its coal-fired power plants anyway because they are fast becoming unprofitable compared to cheaper renewable electricity.
The plan, outlined in internal company documents seen by Der Spiegel, differed little from the deal agreed with the government, and put into doubt the necessity of disbursing billions of euros of public compensation for closures that were in fact only “business as usual”.
Negotiations behind closed doors
On Wednesday (1 July), the Öko-Institut published a study which for the first time estimated the amount of compensation that coal companies could legitimately claim from the government.
Taking into account current electricity prices, the think tank calculated that LEAG would be entitled to receive €0.77 billion instead of the agreed €1.75 billion.
At RWE, the value depends on the actual cost of converting the opencast mines owned by the company. According to the think tank’s calculations, RWE is now set to pocket €1 billion more than the company will actually spend to phase out coal.
However, those figures cannot be confirmed or rejected since negotiations have taken place behind closed doors. Representatives of civil society were not involved, nor was the public able to comment on it, said ClientEarth lawyer Ida Westphal.
“Unfortunately, the formula for the compensation remains unknown,” Westphal told EURACTIV.de. According to her, it would have made much more sense to clearly link the level of compensation to the future profitability of power plants.
Shutdown week for coal-fired power plants
Meanwhile, it is becoming increasingly clear that Germany’s coal phase-out will happen well before the agreed 2038 deadline.
This is because coal power plants are hardly profitable any more. According to Agora Energiewende, a think tank, coal-fired power generation in Germany fell by 40% in the first half of 2020 compared to the previous year.
Lignite and hard coal-fired power plants together accounted for less than 20% of the total power generated, the think tank said in a new analysis published this week. One of the reasons for this is the price of CO2 emission certificates, which is expected to rise significantly in the coming years.
And the same trend is also evident in other EU member states: The expiry of a deadline set by an EU directive on industrial emissions led a number of member states to close down more coal-fired power plants this week.
Spain took more than half of its coal-fired capacity off the grid, with over 4.6 gigawatts, and Poland also shut down 600 megawatts.
Even though the coal phase-out law is expected to pass the Bundestag smoothly today, the bill still needs the green light of Brussels before going ahead.
By autumn, the European Commission’s competition department will look into whether the €4.45 billion compensation deal is adequate to finance Germany’s coal phase-out plan or whether it risks distorting competition on the EU’s internal market.
If it has any doubts, Brussels could launch an in-depth investigation which could significantly delay the process of approving Germany’s coal phase-out bill.
According to the German environment ministry, the talks with Brussels have so far been “extremely constructive”.
(Edited by Frédéric Simon)