The European Commission has signed off on Germany’s plan to provide up to €1.75 billion in compensation to energy company LEAG for the early shutdown of its lignite-fired power plants, a major step in the country’s coal phase-out strategy. The funds will cover lost profits as well as social costs, including measures to support workers transitioning into new employment.
Germany’s coal exit aims to eliminate coal power generation by 2038 at the latest. While western Germany is on track to complete its phase-out by 2030—significantly earlier than originally planned—progress in eastern Germany, where LEAG operates its plants and open-cast mines, is moving more slowly. LEAG’s facilities are scheduled to close in stages between 2028 and 2038.
Because national subsidy schemes can distort competition, EU approval is required for state aid. The Commission ruled that the compensation meets EU requirements, stating it is necessary to support Germany’s climate goals, appropriate in design, and proportionate—limited strictly to what is needed without leading to overcompensation. Brussels previously approved €2.6 billion in payments to western German lignite operator RWE under similar circumstances.
German economy and energy minister Katherina Reiche welcomed the decision, calling the transformation of coal-dependent regions a “generational task.” The EU’s green light, she said, provides long-term planning certainty and opens the way to rebuild regional economies around new technologies, sustainable land restoration, and modern employment opportunities. Compensation to LEAG will be disbursed in several instalments over the coming years.
LEAG is also accelerating its shift toward clean energy. On the same day the EU approved the aid package, LEAG Clean Power — a subsidiary of the group — announced plans for a 1.6 gigawatt-hour battery storage facility on the site of a former coal plant, underscoring the company’s transition strategy.
