He hinted at it in 2024, and now the EU Commission made it official: the federal government’s planned 1.75 billion euro compensation for energy company Leag is in line with competition rules.
The federal government was allowed to compensate the energy company Leag (Lausitz Energie Kraftwerke AG) with billions of dollars in compensation for the phase-out of coal. The EU Commission does not see funding of up to 1.75 billion euros as a violation of EU state aid rules, as announced by authorities in Brussels.
Two years ago it had agreed to a similar payment to RWE. According to the Commission, this assistance is compensation for the premature closure of brown coal power plants. Germany reported the compensation plan to the Commission in 2021. The Federal Ministry of Economy announced in 2024 that the Commission would approve the aid.
1.2 billion for fixed costs
In particular, this involves 1.2 billion euros in “fixed costs” for the follow-up costs of open pit mining – mainly reclamation costs – as well as social costs. This occurs regardless of when Leag actually retires coal-fired power plants. According to the Ministry of Economy, the remaining up to 550 million euros will be subject to conditions starting in 2024.
This money will be paid if it is determined that the Leag power station will become economical after the planned closure date and therefore Leag will lose profits due to the statutory exit rules.
The EU Commission monitors state aid
The EU Commission has now come to the conclusion that the measures are appropriate and proportionate and limited to the minimum necessary. Against the backdrop of Germany and the EU’s climate goals, Brussels argued that “the benefits of this decision clearly outweigh competition concerns,” said EU Competition Commissioner Teresa Ribera.
If a country in the EU wants to support a company with state money, it must adhere to strict rules, the compliance of which is monitored by the EU Commission. In total, state aid for coal phasing out amounts to 4.35 billion euros for the two operators. In early 2023, the Commission approved 2.6 billion euros for RWE’s lignite plant in the Rhineland.
