The European Union authorizes billions for ending coal usage in the east by 2038.
The German government is set to offer its promised billion-dollar aids to the eastern German energy company LEAG as planned. The European Commission has signaled its approval for up to 1.75 billion euros in compensation for the pre-determined coal exit by 2038, according to the federal government, the state authorities, and LEAG.
Of this amount, 1.2 billion euros is intended for covering social costs, restructuring, and land reclamation irrespective of the exit date. An additional 550 million euros caters to the lost profits of the LEAG resulting from the 2038 exit. This should be calculated according to market conditions including the costs for CO2 emissions allowances.
Should LEAG decide to shut down its last power plant for economic reasons before 2038, it would affect the compensation payments.
The traffic light government aims to execute the coal exit as mentioned in the 2021 coalition agreement, where the target is to do so by 2030 if possible. A deal with RWE, in the Rhineland Brown Coal District, has already been reached for this date, where the federal government pays approximately 2.6 billion. For eastern Germany, however, the government does not intend to negotiate such a deal and relies on an earlier exit due to market conditions.
The date of 2038 set for shutting down the last boiler was determined by the previous federal government in 2020. It was evident that compensation and social plans for employees had to be paid for this. The government had confirmed a 1.75 billion euros deal with LEAG way back in 2021. Protracted negotiations between the EU, which investigates potential market imbalances in Europe, are still ongoing.
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The EU's approval of compensation for the coal phase-out includes billions for LEAG, an energy company in eastern Germany. Despite the 2038 deadline for coal phase-out, a premature closure of LEAG's power plant could affect the compensation payments.
