EU: Germany can grant compensations of 1.75 bln. euro for giving up coal

The German Economy Ministry announced on Tuesday that it had obtained approval in principle from the European Commission to compensate the electricity producer LEAG with an amount of up to 1.75 billion euros to give up coal by 2038, Reuters reports.

In 2020, the previous Government in Berlin reached an agreement that aimed to close coal-fired power plants by 2038, as part of Berlin’s ambitious plans to reach climate neutrality in 2045. The German executive agreed with the utility company LEAG that be the level of compensation, but it also needs the approval of Brussels, according to Agerpres.

But the transition to renewables, and efforts to speed up the transition, has generated mixed reactions in the eastern German mining region of Lusatia, where people remain skeptical about the social and environmental impact of moving away from coal, as well as the technical challenges. which will have to be solved.

“This is an important step, especially for the people of the region,” German Economy Minister Robert Habeck said in a press release.

The EU executive had some concerns about the approval of state aid and in 2021 launched an investigation to determine whether this aid will harm competition on the EU internal market.

Approximately 1.2 billion euros of the total amount is intended to cover the social costs of giving up coal and to change the destination of surface mining operations in the Lusatia region, stated the Ministry of Economy in Berlin.

Approximately 550 million euros are allocated to compensate the LEAG company for the earnings it will no longer achieve as a result of the decision to abandon coal until 2038, but the final amount will be adjusted later depending on the market situation, prices pollution certificates and the final date on which the company will give up coal.

“This is an essential building block for our successful transformation into a green powerhouse,” said LEAG CEO Thorsten Kramer.