Lignite plays an important role in Greece's energy sector as it satisfies over 70% of country's needs in electric power. The extraction of lignite takes place mainly in three regions of Greece, namely Ptolemais-Amyndeon, Megalopolis and Florina. The annual production of lignite is around 60 million tons, out of which 48 million tons derive from the coal fields of northern Greece (Ptolemais-Amyndeon and Florina). Almost the entire lignite production is consumed for electricity generation, while small amounts of lignite are used for briquettes and other applications. The Greek coal-fired power plants, which are about 4500 MW, use conventional technology and they are old (an average of 30 years). In the coming years new coal fields will be exploited in Florina-another 2.5 million tons of coal-in order to satisfy the currently under construction 365 MW plant located at Meliti, Florina, Northern Greece. Even though the lignite reserves are widespread in Greece and other areas such as Elassona and Drama could possibly host power plants, it is expected that the Florina power plant will be the last coal-fired plant to be build in the country. Lignite has to compete with natural gas-the construction of the main gas pipeline network has been completed-imported oil and renewable energy sources. The new EU regulations on power plant emissions raise obstacles for the firing of lignite, although it is low in sulphur. It must be shown that lignite produces low cost electricity in a environmentally friendly manner. The utilization of fly ash and land reclamation can improve the situation in lignite mining. In particular, specific attention was paid to further research and potential use of fly ash in road construction, the production of bricks and concrete, and the production of zeolites from lignitic fly ash. The use of clean coal technologies in power plants can solve many emission problems. Specific measures to increase the efficiency of lignite-fired power units might include: identification of the loss sources of every unit, improvement of the cold end of the steam turbines, optimization of the beater wheel mills operation, and the combination of natural gas-fired turbines with the existing boilers. The liberalization of the electricity market needs to be considered seriously from the lignite industry, since the potential electricity producers can freely choose from all kinds of fuels, such as imported coal, oil, gas and renewables. However, Greek lignite meets the requirements for the security of supply, as indicated in the EU's Green Paper. It needs only to be competitive in the new energy sector by improving mining and combustion conditions. Further research on these topics, through the European Commission's ECSC and Framework Programmes, as well as the national programmes, is required. Copyright (C) 2004 John Wiley Sons, Ltd.