A financial setback of more than 1 billion euros threatens the cabinet, because climate measures that affect coal-fired power stations turn out to be much more expensive than anticipated. This is evident from research by NRC†
Dutch coal-fired power stations may only use 35 percent of their ‘normal’ amount of CO . in the coming years2 and can therefore produce much less electricity. This legal measure, which came into effect on 1 January, was introduced after the Urgenda judgment that ordered the Dutch state to do more to reduce emissions.
Also read: Turning off coal-fired power stations is suddenly very expensive
Due to the limitation of their power production, the power stations can generate much less turnover. The three power stations involved, owned by the German energy companies Onyx, RWE and Uniper, receive compensation from the state for this. For the entire period in which the measure applies (2022-2024), the compensation will rise to at least 1.5 billion euros. According to insiders, that is at least five times higher than the government had foreseen.
‘Substantial compensation’
By Thursday at the latest, the energy companies had to apply for ‘disadvantage compensation’ from the Ministry of Economic Affairs and Climate. On Thursday, climate minister Rob Jetten (D66) wrote in a letter to parliament that the requested compensations are “very substantial”.
“Containment of coal-fired power plants is still one of the most cost-effective ways to reduce CO . in the short term2reduction”, is all a spokesperson for the Ministry of Economic Affairs wants to say.
Neither EZK nor the three energy companies involved want to confirm the figures, because the parties will still conduct financial negotiations. However, sources from the coal sector and The Hague agree that such high fees are involved. The amount requested is probably even higher than 1.5 billion euros.
The production limitation for coal-fired power stations was proposed in April 2020 by then minister Eric Wiebes (VVD), but it took a long time before the law was introduced. Since then, market conditions for coal-fired power stations have improved greatly, mainly due to the high gas price.
“We’ve never seen profit margins like this,” said Jean-Paul Harreman, director of energy data platform EnAppSys, about the coal-fired power stations. In addition, the calculation method prescribed by the Ministry of Economic Affairs and Climate Policy is sensitive to fluctuations in the electricity market. These fluctuations are now strongly in favor of the coal-fired power stations.
The amount of 1.5 billion euros is the result of calculations that Harreman and a second analyst made independently of each other at the request of NRC. The second only wanted to cooperate on the basis of anonymity, because he or she fears harming business contacts.
The estimated cost of the production limitation for the coal-fired power plants has never been made public. The state spends about 3 billion euros annually on climate subsidies.
There has been a political discussion about curtailment or closure of coal-fired power stations since the first court decision in the Urgenda case in 2015. At that time, the judge ruled that the state should2emissions by 2020 should have been reduced by at least 25 percent compared to the benchmark year 1990. For many years, measures against coal-fired power stations were much cheaper than other measures to improve sustainability.
Ultimately, the previous cabinet only took the necessary climate measures in 2020, after the Supreme Court had ratified the Urgenda decision. Last year the emissions were still too high. The production limitation for coal-fired power stations must, however, keep emissions below the Urgenda standard in the coming years. Incidentally, the CO2emissions will decrease even more: the current government aims to reduce emissions by 60 percent by 2030.
The NRC’s calculations also show that energy company Onyx is financially better off, now that it forgoes the subsidized closure of its coal-fired power station in Rotterdam. Climate minister Rob Jetten (D66) was “very disappointed” about this. he reported on Thursday† “It’s a bad decision for the climate.”
Onyx would receive more than 200 million euros from the state to permanently close and dismantle its power station in the coming months. Now that the energy company has decided not to do so, the plant must meet the legal production limit of 35 percent. According to NRC’s calculations, the company will receive an estimated 400 to 450 million euros in compensation over the next three years. In addition, the owner earns from the still permitted electricity production.
Turning off coal-fired power stations is suddenly very expensive page S10-11
A version of this article also appeared in NRC on the morning of April 4, 2022