The EU on Tuesday said it was taking a closer look into billions of euros in aid promised by Germany to firms hit by the closure of coal-fired power plants, over concerns it may give them an unfair advantage.

"Our role is to safeguard competition by making sure that the compensation granted to the operators ... is kept to the minimum necessary," EU competition chief Margrethe Vestager said in a statement.

"The information currently at our disposal does not allow us to confirm this with certainty, and we will now investigate this further," she added.

Germany has embarked on a plan to phase out coal as a source of electricity by 2038 and has promised 4.35 billion euros in aid to operators RWE and LEAG for lost profits.

The EU executive noted that "at this stage" the "preliminary view is that the German measure is likely to constitute state aid".

Despite a green reputation abroad, Germany remains heavily reliant on dirty coal, partly because of a decision to abandon nuclear energy after the 2011 Fukushima disaster.

In the third quarter of 2020, just over half of the electricity produced in Europe's top economy came from non-renewables, with coal alone accounting for 26 percent.

Climate activists have urged the government to speed up Germany's coal exit, saying the current timetable is not ambitious enough.

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Spanish bank Santander to end coal sector support
Madrid (AFP) Feb 22, 2021
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