June 24, 2020 / 11:38 AM / a month ago

German cabinet backs 4.3 bln euros for utilities over lignite phase-out

BERLIN, June 24 (Reuters) - Chancellor Angela Merkel’s cabinet on Wednesday approved a 4.3-billion-euro ($4.86 billion) compensation package for utilities operating lignite power stations as part of Germany’s plans to phase out coal by 2038.

“Even in the (coronavirus) pandemic we are insisting on strong climate protection,” Finance Minister Olaf Scholz said. “Today we took a major step on the path to this goal.”

Utilities in Germany include RWE, Uniper , EnBW, Vattenfall, Steag and LEAG.

The size of the package was agreed between Merkel’s government and the utilities affected by the phase out, which is expected to cost billions of euros, including 40 billion euros in investments in mining regions.

The lower house of parliament, where Merkel’s conservatives and their Social Democrat (SPD) coalition partner have a majority, will be asked to approve the package.

In addition to the package pertaining to lignite, or brown coal, the coalition partners still need to agree on the final details of a separate compensation package for utilities with plants powered by hard coal.

The government this month approved plans to cut greenhouse gas emissions by 55% by 2030 as well as measures to deliver this aim, which in addition to the coal phase-out include carbon pricing for transport and buildings next year.

Parliament in early July is expected to vote on a bundle of laws pertaining to the coal phase-out.

$1 = 0.8841 euros Reporting by Markus Wacket; writing by Joseph Nasr; editing by Jason Neely

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