Essen, 20 March 2015, RWE AGThis pressinformation is more than two years old

Proposals of Federal Ministry for Economic Affairs and Energy endanger the future survival of lignite

• Power plants and open-cast mines threatened with closure
• 30,000 jobs endangered in lignite industry
• Damaging for Germany as an industrial location
• No benefit in terms of climate protection

Proposals of the German Federal Ministry for Economic Affairs and Energy were revealed yesterday according to which the climate protection targets of the German government were to be implemented by reducing CO2 emissions from power plants by 22 million tonnes. The “National Climate Protection Instrument” was to be “targeted and connectable to the Euro-pean Emissions Trading System”, have no influence on security of supply and only a small impact on the price of electricity. Only 10% of fossil-fuelled power stations would be affected, and even the operation of older plants would only be affected to a limited extent, according to the proposals. A further claim was that “a large number” of jobs were to be preserved.
A closer look at the proposed model results in very different conclusions – with far-reaching consequences, especially for the lignite industry and the jobs that depend on it. The earnings strength of the lower-cost power stations in Germany in particular will be damaged and value will be destroyed.

The details:

  • “Old” power plants will lose so many operating hours and gross margins as a result of the proposals of the Federal Ministry for Economic Affairs and Energy that there can be no talk of “reduced operations” – it will in fact mean shutting down plants. They will not be able to cover their costs via the utilisation hours that remain to them or they would be pushed out of the market due to the additional fees of €18-20 per tonne of CO2.

  • The proposals of the Federal Ministry for Economic Affairs and Energy will lead to CO2 reductions of around 70 million tonnes (not 22 million tonnes, as stated in the proposals) due to the economically necessary shutting down of the power stations in question. This CO2 reduction burden will be too much for the companies affected to absorb.

  • The proposals would not lead to a CO2 reduction in absolute terms. Companies would be forced in many cases to shut down power plants instead of continuing operations and purchasing expensive emissions certificates which the government would then take off the market. Due to decommissioning of plants, the desired effect would thus not occur, the certification volume in the ETS would remain unchanged and as a result emissions would simply be shifted abroad.

  • A much higher percentage of the German fossil-fuelled power station fleet would be affected than the 10% claimed in the proposal. Operation of around 40% of power plants would be either constrained or even shut down. Capacity of over 10 GW would be taken off the grid. In combination with the completion of the nuclear exit, Germany would lose over 20 GW of secured capacity due to power plant decommissioning by 2025. It would not be possible to close this gap through new-builds no through importing power. And as a result, there would have to be additional reserves to secure supply.

  • At least 30,000 jobs would be threatened in the lignite industry alone, as well as much more than 70,000 jobs at suppliers and partner SMEs in the region as well as in energy-intensive industries. In addition, value would be lost to the tune of up to
    €8 billion per year.

  • Especially highly energy-intensive industries would be at a competitive disadvantage as the wholesale price would increase by at least €5 per megawatt hour (MWh) as a result of this proposal. There would also be an effect from the nuclear exit of around €4 per MWh by 2022. Overall the electricity price would increase by at least 30% compared to current prices.

  • It is questionable whether such models, which discriminate against power plant operators comply with European legislation and constitution.

The proposals of the Federal Ministry for Economic Affairs and Energy will introduce a total exit from lignite in the short run. Not only power plants but also the associated open-cast mines and operations would have to be closed down. In addition, all existing permits would be in danger and recultivation plans rendered obsolete. Restructuring costs for the companies affected would run into the billions.

RWE rejects such proposals. They endanger the competitiveness of the companies affected. They also damage Germany as an industrial location and the federal state of North Rhine-Westphalia in particular.

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: This pressinformation is more than two years old