On December 6, Germany’s highest court handed down a mixed ruling that practically everyone is interpreting as confirmation of their original position. The ruling provides clarity but does not put the issue to rest for good. By Craig Morris.
The ruling can be summed up quite simply: Chancellor Merkel had the right to enact her sudden nuclear phaseout of 2011, but she did so clumsily. Press reports estimate that the three plaintiffs were suing for 19 billion euros in damages. Because the court ruled partly in favor of the government, that number is now expected to be much lower – and it will not be decided for some time, probably settled out of court.
To understand the ruling, we have to remember the timeline:
- 2002: The German government (under Chancellor Schroeder) signs an agreement with the nuclear utilities in Germany (one of which, Vattenfall, is wholly owned by the Swedish state) to limit the service lives or reactors to 32 years of expected power production. Note that there was no deadline in terms of time, but in the amount of electricity generated. For instance, if a plant ran at 50% capacity, it could theoretically run twice as long. So the utilities had a right to an amount of power generation, not to time itself.
- 2010: Chancellor Merkel extends those commissions by 8 to 14 years of equivalent power production, depending on the reactor type.
- 2011: Merkel adopts fixed deadlines (time) instead of power amounts and shuts down 8 of 17 reactors immediately.
The court explains in its press release that the public good (nuclear safety) “favors the interference” of the government, which the court therefore considers “proportionate.” And the court also rejects the notion that the utilities had made any significant investments between the 2010 extension and the 2011 phaseout: “the period of time… {December 2010 to March 2011, CM} is too short to justify the general assumption that the nuclear power plant operators had already lastingly adapted to the on average twelve-year prolongation of the operational lifetimes.” Experts estimate that the firms will not be able to demonstrate much if any investments during that timeframe when negotiating for damages now (in German). German Finance Minister Schäuble doubts that the damages will even be significant for his budget in 2017 and 2018; law firm Becker Büttner Held speaks of “hundreds of millions” instead of 19 billion (in German).
And to those arguing that Fukushima did not change the safety of Germany reactors, the court has a clear message: “the evaluation of a high-risk technology that is particularly dependent on political assessment and the public acceptance of the risks of damage may also ascribe a weight to events that only change the public’s awareness of the risks without bringing to light new dangers.”
On the other hand, the 2002 phaseout “gave rise to a particular legitimate expectation” from the utility perspective. The 2011 phaseout’s fixed timeframe means that two utilities, RWE and Vattenfall, will not have time to produce the electricity agreed in 2002. “These deficits in the production of electricity could have been avoided, even without calling into question the targeted date of the complete phase-out,” the court criticizes Merkel’s decision.
Thus, the plaintiffs have a case when asking for compensation. On the other hand, “the legislature is not bound by the Constitution to spare the parties concerned every burden.” So the amount the government owes these firms, if any, is up in the air, and “the legislature has various options at its disposal for remediating the constitutional violations.” The phaseout itself is thus constitutional; the 2011 implementation of it, not so much.
The Greens, who were part of the Schroeder coalition in 2002, thus praised the wisdom of their phaseout design, which has stood the test of time. But German energy journalist Malte Kreutzfeldt disagrees (in German): “If {Schroeder’s coalition} had not agreed to power amounts instead of fixed deadlines, we wouldn’t have this problem today.”
Eon and RWE, the two German plaintiffs, will now take the ruling into negotiations with Berlin over liability for nuclear waste disposal; other cases have reportedly been dropped (in German), aside from the tax on nuclear fuel rods imposed in exchange for the (now revoked) roughly 12-year extensions of 2011. The third firm, Sweden’s Vattenfall, still has one option left as a foreign company: the ICSID in Washington, which handles complaints by foreign investors against governments. Apparently, the Swedish state will continue to seek damages from Germany there (report in German).
Craig Morris (@PPchef) is the lead author of German Energy Transition. He is co-author of Energy Democracy, the first history of Germany’s Energiewende, and is currently Senior Fellow at the IASS.