The European Commission has given the green light in principle for the German government to pay compensation to cushion the impact of the coal phase-out in the east of the country.
This involves paying the mining company Leag up to €1.75 billion ($1.9 billion), the Economy Ministry announced in Berlin on Tuesday. Germany is to gradually phase out the use of all coal by 2038.
Economy and Climate Protection Minister Robert Habeck spoke of an important step, especially for the people of the region. "This secures compensation funds for the social security of employees during the transition and for the post-mining costs."
Leag's chief executive Thorsten Kramer said that the compensation was an essential building block for the company's continued successful transformation into a "green powerhouse."
The competition authorities in Brussels had to approve the move, because EU members wishing to support companies with state money must adhere to strict rules. The European Commission has now confirmed the principle of the compensation scheme for Leag's coal phase-out.
The deal involves about €1.2 billion for post-mining costs to help heal some of the environmental and social scars left behind after the use of coal ends.
The ministry says the remainder of up to €550 million is subject to conditions.
Politicians and the energy company RWE have agreed to phase out coal mining in western Germany eight years earlier, in 2030.
However, an earlier coal phase-out in the eastern German mining regions is controversial. In its coalition agreement, the Social Democrats (SPD), Greens and Free Democrats (FDP) agreed to "ideally" bring forward the coal phase-out from 2038 to 2030.