Germany’s government has committed to pay utility companies billions of euros to speed up the shutdown of their coal-fired power plants as part of the country’s efforts to fight climate change.

The agreement was reached between federal ministers and representatives of four coal-mining states, the regions most heavily dependent on mining lignite, black or brown coal. Together with imported bituminous, coal and lignite are responsible for about one-third of Germany’s electricity needs, as well as a large share of the country’s carbon emissions.

The German government has already promised 40 billion euros to soften the impact of abandoning fossil fuels. According to Finance Minister Olaf Scholz, operators of heavily polluting coal-fired power plants in western Germany will receive an additional 2.6 billion euros ($2.9bn) in compensation for switching them off early, while 1.75 billion euros will go to those with plants in the east.

The government said reviews will be carried out in 2026 and 2029 to determine whether Germany can exit coal-fired electricity generation in 2035, three years before the final deadline.

Mixed reactions to the decision

“What we have here is a good agreement for climate protection because it makes clear that we mean it seriously,” said Economy Minister Peter Altmaier. He added that the government plans to bring legislation to parliament at the end of this month.

Environmental campaigners criticized the decision though, stating it’s too little, potentially too late. Environmentalists noted that the agreement will see a new coal-fired plant — Datteln 4 — go on-line this year and allow for the expansion of the Garzweiler open-cast mine in western Germany.

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“Australia’s forests are burning, millions of people are demonstrating for climate protection and the German government is clearing the way for a new coal power plant,” lamented Martin Kaiser, the managing director of Greenpeace Germany. “Nothing shows more clearly than Datteln 4 that this government can’t find an answer to the climate crisis.”

E.ON and RWE have benefitted with a 2 percent increase in share price, as both utility companies stand to receive significant compensation for shutting down their coal plants.

However, questions abound about how the electricity currently produced from coal will be replaced and whether renewable energy targets are sufficient to support the move.

Environment Minister Svenja Schulze acknowledged that Germany will need a “massive expansion of wind and solar energy” as the country is also in the process of exiting atomic power, with the last nuclear reactor set to go offline at the end of 2022.

“We are the first country that is exiting nuclear and coal power on a binding basis, and this is an important international signal that we are sending,” said Schulze.