The European Commission has cleared the way for billions of euros in subsidies to be provided to Germany and Spain with the aim of ending coal power in these countries.
The EU approved nearly €4bn in subsidies to close down Spain’s unprofitable coal mines and Germany’s lignite-fired power stations.
€2.1bn is to be spent by Madrid in closing 26 coal mines that are no longer profitable. This state aid will be permitted on the condition that the closure of the mines is completed by 2019.
“The Spanish authorities have given a commitment to recover any aid from mines that have not been closed by that date,” the Commission said in a statement.
Meanwhile in Germany, Brussels has authorised the government to subsidise the closure of power stations fuelled by lignite.
Merkel’s cabinet negotiated the closure of eight lignite-burning installations owned by Mibrag, Vattenfall and RWE between 2016 and 2019. Together, these eight power stations represent 13 per cent of Germany’s lignite-burning capacity.
By 2020, the closure of these power stations will cut the annual carbon emissions of Germany’s electricity sector by 11 to 12 million tonnes. In return, the federal government in Berlin will compensate the electricity companies to the tune of €1.6bn for loss of revenue.
In a statement the Commission concluded that “the effects of the measure on the electricity market are expected to be limited and that potential distortions of competition created by the aid are largely offset by the environmental benefits”.