Germany is to pay billions of euros to utility companies to speed up the shutdown of their coal-fired power plants, the government said on Thursday.

Federal ministers met with representatives of four coal-mining states to reach the agreement that takes the country towards its target of reducing greenhouse gas emissions.

Currently, Germany relies on coal for around a third of its electricity needs.

The Finance Minister, Olaf Scholz, announced operators of plants in western Germany will receive €2.6 billion for switching them off early, while those in the east will get €1.75 billion.

The compensation is separate from up to €40 billion the government has already promised to coal-mining regions to soften the blow of abandoning the fossil fuel.

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.

``"What we have here is a good agreement for climate protection because it makes clear that we mean it seriously,'' Economy Minister Peter Altmaier said.

Ann Katrin Schneider from Friends of the Earth Germany told Euronews the group was "disappointed by the decision of the German government." She said phasing out the plants by 2038 was "much too late" and would not honour the country's commitments under the Paris agreement.

New coal-fired plant to go online

Environmental campaigners have criticised the announced plans, pointing out a new coal-fired plant, Datteln 4, will go on-line this year, and another mine in western Germany will be expanded.

"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,'' said 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.''

He added Chancellor Angela Merkel had missed a chance to show Germany was "reacting appropriately" to the climate crisis.

The government has set a target of generating 65% of Germany's electricity from renewable sources by 2030.

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,'' she said of Thursday's agreement.