Two energy companies have sued Germany over coal phase-out and over-profit tax – PowerShift calls for more commitment from the federal government
Berlin, 1 November 2023: The environmental organization PowerShift looks with great concern at two arbitration lawsuits filed against Germany in the past two weeks under the Energy Charter Treaty.
On the one hand, the Swiss energy company Azienda Elettrica Ticinese (AET) is suing the Federal Republic of Germany over the German coal phase-out. AET has a 15 percent stake in the Trianel coal-fired power plant in Lünen, North Rhine-Westphalia, which is to be shut down in 2032. Trianel had not received any breastfeeding compensation in the context of the bidding competition. AET is represented by the law firm Luther, which also represents RWE in the lawsuit against the Dutch coal phase-out. PowerShift has received a statement from AET.
On the other hand, the international industrial raw materials group Klesch-Group, headquartered in London and Geneva, is suing Germany, Denmark and the EU over the excess profit tax. This comes from an Question by Ralph Lenkert, Member of the Bundestag (Left) to the federal government. Klesch Group operates Germany's largest refinery in Heide, Schleswig-Holstein and a refinery in Denmark.
‘Whether it's a coal phase-out or an over-profit tax, with lawsuits before arbitral tribunals, investors seek to undermine democratically made decisions and impose the costs of the energy transition and the energy crisis on the general public. This must finally end. In a democratic community, non-transparent arbitral tribunals have no place," says Fabian Flues, trade expert at PowerShift.
PowerShift calls on the federal government, together with other states, to find ways to exclude arbitration lawsuits in sensitive areas such as the energy transition. “If democratic decision-making processes and public courts are circumvented, states must defend themselves. In the coalition agreement, the traffic light promised to significantly limit arbitration lawsuits. After Germany's important exit from the Energy Charter Treaty, it now has to back up", Flues explains. In addition, the European Council must also immediately abandon its blockade against a joint withdrawal of all EU Member States from the Energy Charter Treaty, as the Commission and Parliament have already called for.
background
The Energy Charter Treaty (ECT) is an international trade and investment treaty that entered into force in 1998. Investors can sue states in private investor-state dispute settlement (ISDS) for decisions that affect their expected profits, including for climate action. After years of protests against the ECT and three years of unsuccessful negotiations on its reform, Almost a year ago, on 11 November 2022, the Federal Government announced that: Germany will withdraw from the agreement at the end of 2023. However, an exit from the Energy Charter Treaty is subject to a 20-year continuation clause for existing investments. If many member states leave together, this could be defused. Germany is also a party to over 100 investment protection agreements, the vast majority of which allow lawsuits to be brought by private arbitral tribunals.
Press contact
Fabian Flues (PowerShift trading expert)
fabian.flues@power-shift.de, 0159 06113733
