The German energy company RWE is demanding compensation from the Dutch state, because the government wants to ban the burning of coal. RWE believes that the Dutch government should cover the financial damage of such a ban. The cabinet refuses that and that is why the energy company is filing an international arbitration case with the International Center for Settlement of Investment Disputes (ICSID) in Washington, Minister Bas van ‘t Wout (Economic Affairs, VVD) announced on Thursday.
According to the cabinet, RWE believes that the heating ban will cost the company 1.4 billion euros. Minister Van ‘t Wout writes to the Lower House that the amount is not substantiated and no interest has been added to it. In a press statement, the energy company does not mention the 1.4 billion euros – only that the cabinet decision to ban RWE two years ago would have cost RWE 2 billion euros.
It is the first formal dispute settlement procedure that an investor has brought against the state, according to Van ‘t Wout. RWE and the cabinet have been discussing the consequences of the heating ban for some time. The cabinet believes that companies are given enough time to switch to other energy sources. Moreover, they have plenty of opportunities to recoup investments, Van ‘t Wout argues.
In addition, according to the minister, the cabinet only prohibits energy generation from coal, other options in the existing power stations remain possible. In December, the cabinet explained that position to RWE, but the company has a different opinion and wants to settle the case legally. In 2019, the energy company already threatened legal action.
RWE owns a coal-fired power plant in Eemshaven in Groningen, the company entered the Dutch market in 2009 with the acquisition of Essent. The Eemshaven power station has been in operation since 2015. When the plant was built, it was already the intention that the company could switch completely to biomass in the long term. The CO₂ emissions from combustion were to be stored in the soil, but that plan was canceled due to resistance from the people of Groningen.
Also read: How was it possible that the Netherlands continued to build coal-fired power stations for so long
The government previously determined that power stations must stop using coal to generate electricity before 2030. The cabinet wants companies to stop using fossil fuels and switch to more sustainable alternatives to generate electricity, so that CO₂ emissions fall.
In September, then Minister of Economic Affairs Eric Wiebes released subsidies for coal-fired power stations that wanted to close in the short term. The American owner Riverstone of a coal-fired power station on the Maasvlakte in Rotterdam turned out to be willing to do so. The plant had suffered from technical defects for quite some time.
Wiebes made a subsidy sum available for each plant that would cover the partial income foregone from a closure. The owners of the three other coal-fired power stations in the Netherlands, RWE (Eemshaven and Geertruidenberg) and Uniper (Rotterdam) did not reach an agreement with the state.