Lawsuit against German coal phase-out could cost taxpayers millions

Lawsuit against German coal phase-out could cost taxpayers millions

Joint press release by Alliance Sud, Network Just World Trade, PowerShift, Pro Natura, Public Eye, Umweltinstitut München, WWF Switzerland  

19.05.2025: A briefing published today by eight non-governmental organizations sheds light on the Background to the lawsuit by Azienda Elettrica Ticinese (AET) against the German coal phase-out before an international arbitral tribunal. The Swiss public company is demanding compensation of EUR 85.5 million plus interest for the shutdown of a coal-fired power plant in Lünen, North Rhine-Westphalia, in which it has a participation. According to its own information, AET has invested just over 23 million euros in the power plant project.

A closer examination of the lawsuit shows:  

• The coal-fired power plant has suffered losses every year since its construction. The AET therefore demands compensation for an installation that was deficient and is expected to continue to do so.
• The AET was obliged in a referendum to separate from the participation in the coal-fired power plant by 2035 at the latest. Nevertheless, it wants to be compensated for hypothetical revenues of the power plant until 2053.
• AET's success in the proceedings would call into question the architecture of the German coal phase-out and could lead to further lawsuits before arbitral tribunals by coal companies. Nine other coal-fired power plants in Germany have foreign shareholders who could possibly sue AET’s in an arbitral tribunal if it succeeds.

“It is a scandal that a public company uses undemocratic arbitral tribunals to take action against necessary climate action. The fact that AET is demanding compensation for a loss-making power plant and thus wants to gild a bad investment is driving the whole thing to the extreme," says Fabian Flues, trade expert at the NGO PowerShift.

“Even before the construction of the coal-fired power plant in Lünen, the fiasco was foreseeable. Accordingly, the WWF, the AET and the Canton of Ticino have clearly warned against this economically absurd and climate-damaging short-circuit decision. Instead of taking responsibility, the AET now blames Germany's climate policy for its own failure and demands compensation. This approach is unworthy of a public institution. The Canton of Ticino must put an end to this mockery and hold those responsible to account.” says Francesco Maggi, Managing Director of WWF Svizzera italiana

“Germany has taken an important step by withdrawing from the Energy Charter Treaty, but has not learned from it. While investment protection treaties continue to sabotage our energy policy, the German government is pushing ahead with new agreements with the same problematic arbitration mechanisms," says Ludwig Essig, coordinator of the Just World Trade Network.

Background:

AET's arbitration proceedings take place under the Energy Charter Treaty, an investment protection treaty from the 1990s. The ECT allows investors to sue energy and climate action in arbitral tribunals if they limit their profits. No investment protection treaty has allowed for as many arbitral actions as the ECT. Germany, the EU and 10 other countries have withdrawn from the ECT because it limits their ability to act in the climate crisis too much. Switzerland remains a member of the ECT. The ECT has a revocation clause that allows actions to be brought over a period of 20 years after the withdrawal. However, countries withdrawing from the ECT may conclude an agreement to exclude claims between themselves.

In addition, Germany has the most bilateral investment protection treaties worldwide, which have already enabled 58 investor lawsuits. The German Federal Ministry for Economic Affairs and Climate Protection has described these contracts as ‘obsolete in many respects’. Nevertheless, there are no agreements in the new coalition agreement to address these legacy issues. German civil society calls for these contracts to be terminated in consultation with the partner countries.

Link to briefing: https://power-shift.de/briefing-gefaehrlicher-praezedenzfall-schiedsgerichtsklage/

Press contacts:

• Fabian Flues, Head of Investment Policy at PowerShift e.V., fabian.flues@power-shift.de, +49 (0)30 308 821 92
• Sebastian Obrist, Media Spokesman Klima & Energy at WWF Switzerland, sebastian.obrist@wwff.ch, +41 77 417 68 19