HomeCoal FiredRWE to stick with strategy despite 'forces pushing against coal'

RWE to stick with strategy despite ‘forces pushing against coal’

A spokesperson for RWE says the company will continue to use lignite coal, despite the growing consensus against coal-fired power generation.

Annett Urbaczka, an RWE (FWB:à‚ RWE) spokeswoman, said the turn to lignite had been forced on the company because it’s the only fuel that can compete given the preference awarded to renewables under Germany’s market rules.

Bloomberg reports that ‘there are too many forces pushing against coal for its comeback to last. Europe can’t afford to keep coal-fired plants going and meet stringent targets to reduce carbon-dioxide emissions.’
Peter Terium
RWE’s commitment to lignite can be seen by the company’s continuing plans to build an 1100 MW plant at Niederaussem, near Germany’s border with Belgium. Planned to start operation in 2018, if it gets the final go-ahead it will cost cash-strapped RWE $2.1bn to build.

Germany’s environment minister, Sigmar Gabriel has proposed reducing the number of carbon emission permits in Europe to increase the cost of burning coal. Last month, the government in RWE’s home state of North Rhine-Westphalia moved to limit digging at a lignite mine owned by the company.

“RWE can’t rely on conditions for lignite not to deteriorate politically,” Michael Vassiliadis, president of IG BCE, a union that represents thousands of RWE workers, said in an interview. “Almost all activities come with political risks attached.”

“Due to the higher dependence from electricity generation in Germany, RWE is more vulnerable than EON,” said Thomas Deser, a portfolio manager at Union Investment, who is responsible for the fund’s stake in RWE told Bloomberg.

CEO Peter Terium (pictured) has conceded that the company has come late to the renewables game and rival E.ON has fared much better due to its international portfolio and better renewables record.

Last year, RWE generated 6.4 percent of its power from alternative energy sources, compared with almost double that at EON.

Longer-term, RWE plans to invest more in local distribution grids, renewable plants and its retail business.

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