On Tuesday 18 November, the European Commission approved German State aid of up to €1.75 billion for Lausitz Energie Kraftwerke AG (LEAG), to compensate the company for the early closure of its lignite-fired power plants in the Lusatian mining area by 2038.
The measure, which is deemed to be in line with the ‘CEEAG’ guidelines on aid for environmental protection and energy (see EUROPE 12858/2), will compensate LEAG for fixed additional costs associated with this early closure, including social costs to support employees when transitioning to new work, as well as for forgone profits to be determined based on an approved formula.
To phase out the use of coal in electricity generation from 2038, Germany has entered into agreements to compensate the main producers of lignite-fired electricity to the tune of €4.35 billion: - €1.75 billion for the LEAG installations in Saxony and Brandenburg; - €2.6 billion for the RWE lignite installations in the Rhineland.
The Commission approved this State aid in late 2023 (see EUROPE 13311/28).
According to the EU institution, the contribution of the LEAG measure to EU climate policies outweighs any potential distortion of competition. The State aid is compatible with EU law because it is necessary to encourage the company to gradually close its power plants, which are currently profitable. The measure is appropriate, as it enables a consensus to be reached between Germany and the operators. And it is proportionate, because it is limited to the strict minimum necessary and does not lead to overcompensation. (Original version in French by Mathieu Bion)