The European Union gave its blessing Friday to plans by Germany to subsidize the closing down of eight power plants fired by highly polluting lignite, also known as brown coal.

The country is in the midst of a push to renewable energy sources, but still remains reliant on dirtier fuel like coal to keep the lights on when solar and wind power do not provide enough energy. Germany plans to give up its reliance on coal by 2050.

Under the plans approved by the EU on Friday, Berlin will grant 1.6 billion euros (1.8 billion dollars) in public financing to mothball and subsequently close the eight lignite-fired power plants.

The process is due to start in October and be completed by 2020, the year by which Germany has pledged to slash its carbon dioxide emissions by 40 per cent.

The operators of the eight plants - the companies Mibrag, RWE and Vattenfall - will cover the costs of closing down the plants. But the government will compensate them for "foregone profits as they cannot continue to sell electricity on the market," the European Commission said in a statement.

The EU's executive deemed the plans to be in line with state aid rules in the 28-country bloc, finding that they would not give the operators "undue advantage" over competitors and that any competition distortions would be "largely offset by the environmental benefits."

Last year, 24 per cent of the total electricity generated in Germany was produced from lignite, according to the commission.

The eight plants - located in the states of Lower Saxony, North Rhine Westphalia and Brandenburg - represent 13 per cent of the capacity of German lignite-fired power plants, the commission said.

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