The Swedish government may have approved state-owned Vattenfall’s sale of its German coal-fired power generation and mining assets on Monday but the deal could still face a challenge.

The sale to Czech group EPH has come in for some criticism by environmental groups who say the plants should be decommissioned instead of sold, in line with the goals of the Paris climate change treaty in 2015.
Environmental Lawyers Client Earth’s EU energy and coal lawyer Ken Huestebeck in a statement to Power Engineering International said, “Several obstacles and risks will remain outstanding for months or even years. Due to the lack of transparency provided by the Swedish government which wholly-owns Vattenfall, it might well have betrayed not only its climate ambitions but also its fiscal responsibility by engaging in a highly problematic deal.”

“It’s not a done deal, quite yet.”

As acknowledged by Vattenfall, the deal cannot be closed before being notified to and receiving merger clearance from the European Commission. The EC will check under economic terms whether EPH’s takeover of Vattenfall’s lignite business in Germany would significantly impede effective competition.

Client Earth also noted that a competitor that proposed to pay a significantly higher price than EPH was excluded during the sales process and has already made a complaint to the Commission.

“If the Commission found unjustified State aid in the deal, Sweden would have to get back the difference between the higher price it could have obtained and the negotiated price from EPH. That could result in the deal imploding.”

Regarding the suggestion that the Swedish government will be able to stick by its climate commitments by buying and tearing up 300 million Swedish crowns in EU emissions rights, Huestebeck said, “This is a distraction which will cost the Swedish taxpayer additional millions. It does not have anything directly to do with the deal or with Sweden’s responsibility for it. The Swedish government has not shown that this will have any significant effect on the distorted/dysfunctional ETS market.”