State aid for the closure of lignite plants in Germany

ClientEarth contends that the German government's compensation for closing lignite plants is unlawful State aid. The organization argues that the plants would have closed sooner under market conditions, making the aid unnecessary and disproportionate. Furthermore, it asserts that using public funds to cover mine rehabilitation costs breaches the 'polluter pays' principle and EU environmental law. ClientEarth warns that the measure distorts competition and fails to provide significant environmental benefits, especially in light of a German Constitutional Court ruling requiring more ambitious climate targets.

• The compensations for LEAG and RWE qualify as State aid because the legal phase-out of coal does not constitute an expropriation under German law, meaning operators would likely not obtain such damages in court.
• The aid lacks an incentive effect because market forces—including rising carbon prices and environmental compliance costs—would have led to the closure of most lignite units, particularly those operated by LEAG, sooner than the dates scheduled by the Closure Law.
• Providing aid for mine rehabilitation costs violates the 'polluter pays' principle enshrined in Article 191(2) TFEU, as these costs are the legal responsibility of the operators under Section 55 of the Federal Mining Act.
• There is a risk that the compensation amounts are disproportionate and result in overcompensation due to a lack of transparency in the calculation formula and the failure to use variable parameters that adjust for actual market conditions.
• The measure may circumvent security of supply rules by artificially delaying plant closures until 2038 without evidence that such delays are necessary to prevent energy shortages.
• The aid may lead to market distortions by allowing operators to cross-subsidize other activities, such as renewable energy production, giving them an unfair competitive advantage.
• The environmental benefits of the Closure Law are insufficient to outweigh the competitive distortions, particularly as the 2038 timeline is less ambitious than what is required by the German Constitutional Court's March 2021 ruling.

APA

ClientEarth (2021). State aid for the closure of lignite plants in Germany. https://www.clientearth.org/media/24rjr41i/clientearth-observations-on-state-aid-for-the-closure-of-lignite-plants-in-germany.pdf

Chicago

ClientEarth. State aid for the closure of lignite plants in Germany. 2021. https://www.clientearth.org/media/24rjr41i/clientearth-observations-on-state-aid-for-the-closure-of-lignite-plants-in-germany.pdf.

Wikipedia

{{cite press release |author=ClientEarth |title=State aid for the closure of lignite plants in Germany |date=June 2021 |url=https://www.clientearth.org/media/24rjr41i/clientearth-observations-on-state-aid-for-the-closure-of-lignite-plants-in-germany.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@misc{clientearth2021state, author = {{ClientEarth}}, title = {{State aid for the closure of lignite plants in Germany}}, publisher = {ClientEarth}, year = {2021}, month = jun, url = {https://www.clientearth.org/media/24rjr41i/clientearth-observations-on-state-aid-for-the-closure-of-lignite-plants-in-germany.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }