No money for old lignite

The analysis argues that large compensation payments to German lignite operators are unlikely to be legally justified because the sector is currently loss-making and most plants have already amortised their investments. Under the German Constitution, compensation is only required in cases of 'exceptional hardship', which is unlikely given the plants' low profitability. Furthermore, such payments would likely be classified as EU State aid, requiring European Commission approval. The document suggests the Commission would struggle to find such aid proportionate or necessary, as market forces and high carbon prices are already driving closures, and other countries like the UK have phased out coal without compensation.

• The German lignite sector is currently loss-making, with the fleet losing approximately €664 million in the first half of 2019. Future projections for 2020-2022 suggest losses of up to €1.8 billion for older lignite plants.
• Most German lignite plants have been operational for 25 years or more, meaning they have likely fully depreciated and operators have amortised their investments, weakening the legal argument for compensation.
• Under Article 14(1) of the German Constitution, compensation for redefining property rights is only required if the action results in 'exceptional hardship' or 'undue harm'. Given the current unprofitability of the lignite fleet, establishing such hardship is considered challenging.
• Compensation for lignite plant closures would likely be classified as EU State aid because it is not required under general principles of national law. This would necessitate approval from the European Commission to ensure compatibility with the internal market.
• The European Commission is unlikely to approve large compensation packages because they may fail the 'incentive effect' and 'proportionality' tests. Market conditions, such as high ETS carbon prices, may already be driving closures without the need for state intervention.
• The document notes that other nations have implemented coal phase-outs without compensation, specifically citing the UK's plan to close coal plants by 2025 via an emissions intensity limit of 450g CO2/kWh.

APA

Bright, S., & Westphal, I. (2019). No money for old lignite. ClientEarth. https://www.clientearth.org/media/h4sdu4mo/no-money-for-old-lignite-clientearth-legal-analysis-ce-en.pdf

Chicago

Bright, Sam, and Ida Westphal. No money for old lignite. ClientEarth, 2019. https://www.clientearth.org/media/h4sdu4mo/no-money-for-old-lignite-clientearth-legal-analysis-ce-en.pdf.

Wikipedia

{{cite report |last1=Bright |first1=Sam |last2=Westphal |first2=Ida |title=No money for old lignite |publisher=ClientEarth |date=October 2019 |url=https://www.clientearth.org/media/h4sdu4mo/no-money-for-old-lignite-clientearth-legal-analysis-ce-en.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{bright2019money, author = {Bright, Sam and Westphal, Ida}, title = {{No money for old lignite}}, institution = {ClientEarth}, year = {2019}, month = oct, url = {https://www.clientearth.org/media/h4sdu4mo/no-money-for-old-lignite-clientearth-legal-analysis-ce-en.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }