Germany will pay its 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 crisis, the government has said.

The agreement reached between federal ministers and representatives of four coalmining states removes a key hurdle in Germany’s plan to curb greenhouse gas emissions over the coming decades.

Some regions, particularly in the less prosperous east, are heavily dependent on mining lignite, or brown coal. Together with imported bituminous – or black – coal it provides about a third of Germany’s electricity needs but is also responsible for a big share of the country’s carbon emissions.

The finance minister, Olaf Scholz, said that operators of heavily polluting coal-fired power plants in western Germany will receive €2.6bn (£2.2bn) in compensation for switching them off early, while €1.75bn will go to those with plants in the east.

RWE, Germany’s biggest power producer, said it would cut some 6,000 jobs, or nearly a third of its current workforce, by 2030 as the country phases out brown coal as an energy source. It said the compensation offered was less than the €3.5bn hit it estimated it would take, even excluding the expected loss of profits. However, the deal pushed up RWE’s share price by 2%, their highest level in five years.

The compensation for the utilities is on top of €40bn that the government has already promised to coalmining regions to soften the economic 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,” the economy minister Peter Altmaier said.

Environmental campaigners criticised the decision, though, noting that the agreement will still mean a new coal-fired plant – Datteln 4 – goes online this year and allow for the expansion of the Garzweiler opencast mine in western Germany, although a nearby forest that has been the target of long-running protests will be spared.

“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.

“Chancellor [Angela] Merkel has missed a chance today to provide companies with long-term planning safety and to send a signal that Germany is reacting appropriately to the climate crisis.”

Eric Schweitzer, who heads the Association of German Chambers of Commerce and Industry, said a key question is how the electricity currently coming from coal-fired power plants will be replaced. The government has set a target of generating 65% of Germany’s electricity from renewable sources by 2030.

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The 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. The last nuclear reactor is 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.

The head of Germany’s main industrial lobby group, BDI, urged the government not to wait until 2026 – three years after the shutdown of the last nuclear plant – to review the measures.

However, Altmaier, the economy minister, said that while there would less “excess production” in Germany in the future, “we are very sure that we can ensure sufficient electricity supply for business but also for private consumers”.