Germany’s Nuclear Exit Stymied By Compensation Concerns

Germany’s supreme court has ruled that the compensation clauses in Chancellor Angela Merkel’s plan to phase out nuclear power by 2022 violate the country’s constitution, throwing the country’s nuclear phase-out into further doubt.

The original legislation already had to be amended because of concerns that compensation wasn’t being handled correctly. The Atomic Energy Act, originally passed in 2011 after the nuclear disaster in Fukushima, Japan, will now have to be revised again.

The 2011 law shut some of Germany’s nuclear plants down immediately, and set a timeline for shutting down others gradually by the end of 2022. Plant operators Vattenfall, RWE and E.ON challenged the law, saying they were not being adequately compensated for the forced closure of their assets.

Germany’s constitutional court ruled in their favor in 2016 and tasked the government with rewriting the law to ensure fair compensation for residual electricity volumes previously awarded to the plants. The government did so in 2018, but the high court has ruled that the law is still not fairly compensating the operators.

The court said the conditions for compensation were unclear and did not remedy the violation of the owners’ fundamental right to property. Worse, sections of the law could lead to a double reduction of their claims.

German environment minister Svenja Schulze said in a press release after last week’s ruling that she would quickly introduce a revision to the legislation that meets the court’s requirements. But she noted that the ruling doesn’t challenge the government’s ability to phase out nuclear power, only the way it’s chosen to do so. “It is clear that today's ruling does not concern the nuclear phase-out by 2022 as such, which was essentially confirmed by the Federal Constitutional Court as early as 2016. It is about a marginal issue: rules for some hypothetical compensation claims of the nuclear power plant operators,” she said.

Vattenfall, which launched the challenge to the revised law, said in a statement that it welcomes the court’s decision. The company wants the revision to ensure they receive adequate compensation for those amounts of residual electricity that it couldn’t sell at normal market conditions.

But Vattenfall’s legal action has been criticised by Germany lawmakers. Green MP Sylvia Kotting-Uhl, the head of the German parliament’s environment committee, said that Brunsbüttel and Krümmel, the two plants for which Vattenfall is fighting for compensation over their closure, “were not in operation for years before their decommissioning due to massive safety deficiencies”.

Separately, Vattenfall is pursuing legal action against Germany at the International Centre for Settlement of Investment Disputes, seeking compensation for the loss of income from closing the power plants.

Merkel, who had previously not supported the plan by the opposition Social Democrats to phase out nuclear power, performed an about-face after the Fukushima nuclear disaster. But critics have said the policy shift was done without consultation with neighbouring countries or the energy sector, and has in the short term caused increased reliance on coal to make up for the lost nuclear power. Nuclear’s proponents have questioned why the government is shutting down a carbon-free source of power right when the world is trying to lower emissions.

Merkel has launched a commission to study how the country can phase out coal. But the commission’s efforts have also been stymied by infighting and legal complications.