EU clears €1.75 billion in compensation for early coal plant closures in eastern Germany
Clean Energy Wire
The European Commission has approved Germany’s plan to pay energy company LEAG up to 1.75 billion euros for the early closure of lignite-fired power plants under the country’s coal exit plan. The compensation covers lost profits and social costs to support employees as they transition to new jobs.
Germany agreed to phase out coal power by 2038 at the latest. While western Germany’s coal exit is advancing faster than originally planned, with the phase-out now expected by 2030, progress in the east – where LEAG operates plants and mines – remains slower. LEAG’s plants will permanently shut down over a span of ten years, in 2028, 2029, 2035 and 2038.
The European Commission must give consent to state aid measures to ensure fair competition in the union. EU guidelines allow member states to support certain measures for reducing or removing CO2 emissions – even at the risk of distorting competition. The Commission found that the state aid to LEAG is necessary to exit coal in line with climate objectives, appropriate, and proportionate, “as it is limited to the minimum necessary and does not lead to overcompensation.” The EU has already approved 2.6 billion euros in compensation payments to western German lignite operator RWE.
German economy and energy minister Katherina Reiche welcomed the EU approval. Moving the economy in the region away from coal is a generational task and the decision provides planning security, she said. “Now the future of an entire region can be shaped in a socially acceptable and economically sound manner: with future technologies, new jobs and sustainable recultivation of open-cast mining landscapes.” The ministry said that payments to LEAG would come in several instalments over the coming years.
LEAG is increasingly shifting its focus towards clean energy. On the same day of the EU green light, subsidiary LEAG Clean Power announced plans to build a 1.6 gigawatt-hours (GWh) battery storage project at the site of a former coal plant.
