05 Feb 2021, 13:33
Benjamin Wehrmann

RWE sues Netherlands for two billion euros compensation over the state's 2030 coal exit

Clean Energy Wire / Handelsblatt

German energy company RWE is suing the Netherlands for compensation payments in relation to the country's coal phase-out plans, the World Bank's arbitration court (ICSID) has announced. In contrast to Germany’s planned coal exit, the Dutch phase-out law for the fossil power source does not stipulate an "adequate compensation" for plant operators, business daily Handelsblatt reports. "We don't think that this is legal," the company told the newspaper, which cites industry sources as saying RWE is claiming about two billion euros from the Netherlands. The country plans to end coal-fired power production by 2030, up to eight years earlier than Germany, which impacts two plants operated by the biggest German energy company. It would also mean the Eemshvaen plant, which was built in 2015 for 2.5 billion euros, would have to go offline, and RWE is arguing that the Dutch government encouraged the company's investment just a few years ago.
NGO Client Earth said in an e-mailed statement that the legal action taken by RWE amounted to "an aggressive response to necessary and foreseeable action by the Dutch government to combat climate change," and argued that the lawsuit is "entirely the wrong message to send." The NGO said the ICSID should reject the company's claims, adding that "poor business decisions" made by RWE could not be addressed by "shifting losses from stranded assets onto states." Client Earth legal expert Mascha Klein said that while Germany had taken precautions to prevent compensation lawsuits in the context of its own coal phase-out, it could not be ruled out that companies will at least attempt to bring forward similar legal action. She said RWE's lawsuit was setting "a worrying precedent" and put into question the company's stated climate ambitions.

The Dutch government argues that the ten year transition period, which started from the implementation of the law in 2019, gives RWE and other energy utilities enough time to switch to other energy sources. The time period also allows companies to (partially) earn back investments, economy minister Bas Van ‘t Wout wrote in a letter to the parliament.

Following a controversial asset swap deal with former competitor E.ON, RWE – Germany's biggest coal power producer – has sought to green its image, and announced it would make its operations carbon-neutral by 2040. The company is also facing criticism in Germany for continuing with the demolition of villages to expand its lignite mines, which according to climate activists and affected residents is no longer necessary as the company has agreed to end its use of the fossil power source.

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