Energy giants demand billions from Dutch taxpayers for stranded coal assets
New research undermines billion-euro claims for coal compensation.
About
Coal assets held by RWE and Uniper in the Netherlands are already economically unviable and have largely been written-down, according to a new analysis by IEEFA and Ember, in collaboration with Dutch knowledge centre SOMO. Market forces, not Dutch legislation, are causing the demise of these coal-fired power plants.
Read the full report from SOMO
Executive summary
Overview
- German utilities RWE and Uniper (owned by Fortum in Finland) are suing the Netherlands under the Energy Charter Treaty (ECT) for phasing out coal-fired power generation by 2030.
- RWE is seeking €1.4 billion in compensation for incurred damages, saying it can no longer run its Eemshaven power plant profitably after 2030. Uniper is seeking compensation between €850 million and €1 billion for its Maasvlakte 3 plant.
- Power producer Riverstone is also negotiating with the Dutch government over compensation for the closure of its plant.
- Market forces have rendered these coal plants economically unviable. The owners were making huge impairments on them from as early as 2013. This is due in large part to the uncompetitive economics of coal-fired generation, driven by a rising carbon price and cheaper generation from renewables and gas plants.
- The ECT is impeding EU coal phase-out strategies and creating a barrier to achieving emissions reduction targets by empowering foreign investors to sue countries for losses they claim are caused by climate legislation.
- Taxpayer money spent on payouts could instead be used to support a just green transition
Compensating for stranded assets
New research shows flaws behind claims for payouts
There is an even poorer outlook for profitability going forward. Our findings suggest that total net losses could already amount to at least €470 million by 2030 for all three plants. The ECT enables these energy companies to sue for loss of potential future earnings beyond 2030. The compensation claims overlook the fact that these supposed future profits are infeasible by 2030 and beyond.
Conclusion
A flaw in the system
The Energy Charter Treaty allows for companies to shift the consequences for short-sighted investment decisions onto taxpayers.
Market forces and a shifting energy landscape are behind the demise of coal assets held by RWE and Uniper in the Netherlands, not Dutch legislation. Despite this, the German utilities are suing the Netherlands under the Energy Charter Treaty, seeking billions in compensation. The ECT opens up the risk of public money being wasted on unprofitable and climate-damaging fossil fuel assets. These funds could instead be invested in the accelerated deployment of clean electricity generation that is required to decarbonise Europe.
