Coal mines demand billions from government: ‘Farmers bought out, not us’

It feels like a contradiction in terms. The day after the government announced that the coal-fired power plants will run faster to prevent a gas crisis, the owners of these coal-fired power plants face the same government in court. The reason: the Coal Prohibition Act.

In 2030, coal will no longer be fired. Coal-fired power plants then have nothing to do in the Netherlands. They must be closed or converted into, for example, a biomass plant.

The owners of these plants, the German energy companies RWE and Uniper, are not being compensated and are furious about this, according to the request of their lawyers. Households and businesses receive significant subsidies to become more sustainable. Farmers must stop in the public interest, and there is a bag of money ready for that.

‘Almost the whole of the Netherlands will receive money’, says RWE’s lawyer, but the coal-fired power plants must themselves cough up the lost income and the investment that has not been earned back.

High cost

For example, the construction of the coal-fired power plant at Eemshaven cost 3.2 billion euros and was “paid for entirely out of pocket”. According to RWE, it will now unexpectedly close after less than half of its life, while the government itself has lured companies to build coal-fired power plants in the Netherlands.

According to the energy company, conversion to a biomass power plant leads to great uncertainty. The question is whether such a biomass power plant will be profitable and whether the government will also close the biomass plants in the long term. According to the energy companies, the government has not proven to be a reliable partner. “RWE also makes sure to play against a Law banning biomass to go up”.

RWE is demanding 1.4 billion euros. Uniper almost 1 billion.

For the state, this lawsuit is a matter of principle: To what extent should the government buy out polluters if they are to go green? It cannot be the case that every polluting company will not become more sustainable in the future and will demand money because it cannot continue to exist in a greener society.

Uniper and RWE’s argument that they did not see the coal ban coming at all is rejected by the state. After all, that was how urgent the climate problem was known. Every company must therefore take into account that the government ‘sooner or later will set a limit for CO2 emissions’, according to the public prosecutor.

Coal disappears anyway

Moreover, according to the state, all indications are that coal will no longer be used in Europe by 2030. By that time, it will be so expensive to emit CO2 that coal and coal-fired power plants will still no longer have a place in the economy. Not so much through politics, but through market forces.

Finally, the government has also given companies an additional eleven years to restructure the coal-fired power plants and find another, more sustainable revenue model.

The state is particularly dissatisfied because RWE and Uniper are not only demanding compensation from the national court. They have also started an arbitration case. It is then decided outside the national courts whether a company is entitled to compensation from a government.

A company often chooses this if it does not trust the national court in question, for example because it is a (poorer) country with corruption. That this is now also chosen in a Dutch controversy was not well received in The Hague.

Counter-reaction polluting companies

But The Hague may well wet its breast. We will see more arbitration cases from polluting companies in the near future, expects Bart-Jaap Verbeek, researcher at SOMO. After the environmental clubs, like Urgenda, going to court to demand a tougher climate policy, he now also sees a reaction from large polluting companies.

“We are already seeing oil and gas companies file arbitration claims against measures to ban or phase out oil and gas exploration.”

Higher compensation

According to Verbeek, companies often have a chance for higher compensation through such arbitration cases. “It is likely that RWE and Uniper therefore also went to arbitration.”

The state is now seeking to annul the arbitral award before a German court. ‘Accidental’, says RWE’s lawyer, who adds that the company does not want to receive compensation twice.

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