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by
Jordy Leo
- December 12, 2023
German energy company RWE [RWE:GR] will receive EUR2.6bn in compensation from the German government for its accelerated phase-out of coal from its energy portfolio, as reported by Bloomberg on December 9. The EUR2.6bn package will be distributed in batches over 15 years and cover costs for RWE’s mine rehabilitations and closures. The deal follows the agreement inked between the German government and RWE last year, wherein the company committed to moving its coal exit forward by eight years to 2030, while extending the operation of two lignite units until March 2024 to help ease Europe’s energy crisis. Last month, RWE also pledged to invest EUR55bn in green technologies through 2030.
The approval of the funding package coincided with the relaxation of EU state aid rules, which allowed EU countries to extend support measures for companies grappling with high energy prices or engaging in energy-transition businesses. In March 2023, the European Commission approved the Temporary Crisis and Transition Framework (TCTF) for State Aid Framework, allowing member states to provide timely financial support to businesses affected by surging energy prices, disrupted supply chains, and major economy uncertainties. Under the framework, the compensation for high energy prices will last until June 2024, while the subsidies intended for covering the transition towards a net-zero economy will remain available until December 2025. Aside from RWE, Germany’s second-largest miner, LEAG, might also benefit from the relaxed state aid rules. Currently, EU competition regulators are deciding over a EUR1.75bn subsidy for the company.
Sources:
https://ec.europa.eu/commission/presscorner/detail/en/ip_23_5861
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