Swedish state-owned utility Vattenfall Saturday cleared a hurdle in its plans to sell its lignite operations in Germany, after securing government approval for the deal.
"I have informed the company that we back the deal that the [Vattenfall] board has decided on," Enterprise Minister Mikael Damberg told reporters.
Vattenfall in April announced it had found a buyer - a Czech consortium - for its coal-fired power plants and mines in the east German states of Brandenburg and Saxony.
The sale was part of the utility's move to pull out of that energy sector, amid a shift to renewable resources. Vattenfall said it expected to close the deal on August 31, pending approval from the European Commission.
Damberg noted that electricity prices have plunged in Germany and that has weighed on Vattenfall and other utilities operating there.
He said the government has since April reviewed the plan and also consulted external experts.
The government concluded the sale was "strategically correct and the best financial alternative," he added.
It was in line with its ownership policy and parliamentary guidelines approved in 2010, Damberg said.
Vattenfall in April said the buyer was a consortium, comprising Czech energy company EPH and its financial partner PPF Investments.
Under the terms, EPH was to take over assets, including cash, worth 15 billion kronor (1.8 billion dollars), as well as liabilities and provisions totalling 18 billion kronor, for instance to restore mining areas.
The bidding process opened in September.
Environmental groups have criticized the sale, saying the coal should remain in the ground to avert global warming.
Saturday's decision will make it harder to implement efforts to prevent climate change and "means that Sweden undermines the Paris Agreement," pressure group Greenpeace Sweden spokeswoman Annika Jakobson said.
She was referring to the global climate agreement forged in December in Paris.
To offset the negative effects, the government planned to buy and annul carbon dioxide emission rights worth 300 million kronor (35 million dollars) each year to push up the price for carbon credits, said Isabella Lovin, minister for international development cooperation and climate.
The plan was set to begin in 2018, Lovin said, adding that the government will invite more countries as well as individuals and businesses to join it.
"The overall effect will be considerably less carbon dioxide [emitted] into the atmosphere," she said.
Lovin is co-leader of the Greens, junior partner in the ruling coalition led by the Social Democrats since October 2014.