EU releases funds for coal phase-out

18.11.2025

Source: E & M powernews

The European Commission has approved payments of up to €1.75 billion to Lausitz Energie Kraftwerke AG (Leag) to gradually decommission its lignite-fired power plants.

On November 18, the European Commission approved the compensation scheme for the planned phase-out of Lausitz Energie Kraftwerke AG (Leag) under state aid law. The Cottbus-based company operates lignite-fired power plants and opencast mines in Brandenburg and Saxony. The EU considers the planned payments of up to 1.75 billion euros to be compatible with state aid regulations and the European internal market.

The Bundestag had previously passed the corresponding amendments to the Coal-fired Power Generation Termination Act (KVBG) and approved the amended public law contract with Leag. According to the Federal Ministry for Economic Affairs and Energy (BMWE), this national legal basis is a prerequisite for Brussels to approve the payments. Minister Katherina Reiche (CDU) explained that the decision from Brussels creates reliable conditions for further structural change in Lusatia.

Saxony and Brandenburg delighted

Approval also came from the federal states. Saxony's Minister President Michael Kretschmer (CDU) emphasized, according to the State Chancellery, that the decision gives the company and the region planning security. He referred to the upcoming recultivation work and the efforts to develop new economic prospects. Brandenburg's head of government Dietmar Woidke (SPD) emphasizes that a large part of the funds will be used for the recultivation of the open-cast mines and will therefore benefit the region.

Leag considers itself financially capable of acting as a result of the approval. Company boss Adi Roesch explains that the promised compensation will cover the costs of recultivation, social obligations and lost earnings. According to the company, the funds will flow into provident funds of the federal states, which have been building up special assets for the recultivation of mining areas since 2019. Roesch also refers to investments in new energy projects that the company is driving forward in parallel with the phase-out.

Financing the restructuring of the regions

The Group Works Council also welcomes the conclusion of the proceedings. Chairwoman Silke Rudolf emphasizes that the employees deserve a socially responsible implementation of the exit. New career prospects must be created for younger employees so that Lusatia remains an energy region.

The KVBG from 2020 stipulates compensation for the lignite-fired power plant operators RWE and Leag. While the payments to RWE were already approved under state aid law in 2023, the review for Leag was more complex. The reason for this is the phased decommissioning of the power plants by 2038 and the associated forecast of lost profits.

The structure that has now been approved comprises several payment stages. Initially, Leag will receive a reimbursement of around 377 million euros at the end of the year for funds already paid into the pension companies. This will be followed by 91.5 million euros annually between 2025 and 2029 for recultivation and social costs. Further payments until 2042 at the latest are possible if the Federal Network Agency confirms lost profits. This means that the total sum remains limited to up to 1.75 billion euros, as provided for in the KVBG.

The next step is the signing of the updated public law contract between the federal government and Leag. According to the ministry, this should take place this year. The first funds can then be paid out on time at the end of the year.

Author: Susanne Harmsen