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DER SPIEGEL from 26.11.2022

“We’re having the wrong discussion again”

Markus Krebber

SPIEGEL: Mr Krebber, in May you said of your company: “We are definitely not a crisis profiteer.” Do you still think so?

Krebber: Yes. Obviously, our results are very good, but if a company invests billions, that is going to lead to increasing returns. We would have been doing something wrong if it hadn’t. And our electricity is currently in strong demand, because the French nuclear power plants are facing serious outages, so we have to step in.

SPIEGEL: But aren’t you profiting from the crisis? RWE doubled its profits in the first nine months. Can you understand that politicians want to take back this money to help those who cannot cope with the rising electricity and gas prices?

Krebber: I believe that it is right for those who are doing well to make a larger contribution. And we are willing to do that, too. But the conditions have to be designed appropriately, so that we don’t endanger the solution to the problem. The only way out of the climate crisis and the energy crisis is through massive investments in new equipment and infrastructure.

SPIEGEL: You are now reactivating nuclear power plants and letting the Emsland nuclear reactor operate for longer. Doesn’t it annoy you that the government first asks RWE to step in – and then takes away some of your profits?

Krebber: The first draft of this legislation has just been announced this week. For nuclear energy, the levy is to be slightly greater this year, and slightly less in 2023. This accounts for the additional costs that we incur for keeping the plants operational beyond the end of the year. I would consider it appropriate if coal were to be dealt with in the same way. There, we now need to convince 1,000 employees to stay on longer, and we have additional costs for maintenance. We need higher revenues for this to be worthwhile.

SPIEGEL: RWE planned to invest 15 billion euros by 2030 in Germany alone, particularly in renewables. Will you still be doing so, or have you lost your motivation?

Krebber: No, Germany remains one of our core countries for investment. The energy supply here needs to be modernised quickly. For this reason, we need an environment that makes investments attractive. And by that I don’t mean excessive profits. When investing for a term of 20 or 30 years, companies need security above all – and not constantly changing regulations. Therefore, we need to stick with the plan for the levy to end in 2024 at the latest.

SPIEGEL: You once said that RWE’s most precarious location was Germany. Do you mean that this is due to the capriciousness of policy makers?

Krebber: What I meant was that we have been having the wrong discussion for years. The energy transition will only succeed if we invest in new technologies quickly enough, and then the old ones will automatically become obsolete. Instead, for far too long we’ve been holding a debate that’s solely focused on shutting things down, without considering how quickly we can find a new alternative. That is happening now though, thankfully. The expansion targets for wind power have been increased and the planning procedures are to be shortened. But it is still going to take at least 18 months until we can see if this bears fruit.

SPIEGEL: You are currently buying a developer of solar farms in the USA for almost seven billion euros. Would you have signed the deal even without US President Joe Biden’s massive subsidy programme, the Inflation Reduction Act?

Krebber: Two factors were involved here. We wanted to play a leading role in the USA in renewable energy. And with the current investment conditions, it was easier for us to take such a big step.

SPIEGEL: Should Europe follow suit with a similar package in the billions of euros?

Krebber: It’s not so much about the subsidies. The United States has realised that rapidly modernising the energy supply gives them a competitive advantage. The new legal framework is valid for ten years, and future governments can’t easily abolish it. When we develop new projects, it takes six years for them to be realised. We have to be sure that the rules still apply then.

SPIEGEL: Initially, people in the EU were impressed that the United States was pumping billions into climate protection. Now there are fears of being left behind. Was Europe naive?

Krebber: The EU should draw inspiration from much of what the United States is doing now. The legislative package contains some problematic elements too, though, such as advantages only for American products. That does not tally with free trade, and we need to discuss that with the United States. I think that one point in particular is worth considering: we should not underestimate the fact that public support for the energy transition will increase if it creates jobs. If a new wind farm is being built and the rotor blades, the foundations, or the steel for it are produced domestically, public acceptance will be guaranteed.

SPIEGEL: How should Europe respond now?

Krebber: For me, two points are decisive. First, a reliable framework is lacking here. These days, hardly a week goes by without new suggestions for changing the market design, the pricing or something else. But the electricity market design can’t be changed overnight; this is a programme that takes years. Some people believe that just switching up the merit order a bit will solve all of the problems at once: more money comes in, we can distribute more money, and the physical scarcity is gone too. But no! It’s not that simple, unfortunately.

SPIEGEL: And what’s the second point?

Krebber: Pragmatism. Particularly with hydrogen. The American programme looks like this: when you produce a tonne of “green” hydrogen from renewable electricity, or “blue” hydrogen from natural gas, you receive a specific subsidy, with green being worth more than blue. In Europe, first you have to fill out a stack of applications. Then Brussels decides which projects are good and which aren’t, while taking regional proportional representation into account as well. We want to build an electrolyser in Lingen and have been waiting for the response to our application for one and a half years. We are not allowed to start earlier, as that would endanger the funding. If I knew that we would get a specific subsidy per kilogram, we would have started long ago.

SPIEGEL: At the beginning of the crisis, you warned us that Germany would face consequences “that nobody dares to imagine” if Russia stopped supplying gas. Since September, there has been no Russian gas, yet the German economy hasn’t collapsed. Were you exaggerating?

Krebber: No, as the drama led to the necessary measures being taken to cushion the crisis. Europe is now using its gas infrastructure to its full advantage for providing mutual assistance. When building the LNG terminals, we achieved in ten months what previously failed in ten years.

SPIEGEL: Couldn’t you imagine that Germany would respond so quickly?

Krebber: I’m delighted that it has succeeded. The situation could have ended much more dramatically. However, in spite of all the relief packages, I am afraid that many people will be surprised how much money they will have to pay for electricity and gas next year.

SPIEGEL: Germany has driven up the prices with the demand for LNG. Now the gas storage facilities are full, and off the coast fully laden tankers are waiting for the temperatures to drop and prices to rise again. Was Europe too cautious?

Krebber: No. Imagine if it had been significantly colder, and if we hadn’t saved as much. What we have now is just a first world problem. In a crisis you have to be prepared for the worst. If the worst doesn’t happen, I can’t understand why that should be seen as a mistake.

SPIEGEL: RWE is switching coal-fired power plants back on, Germany is importing fracking gas, and oil and gas companies are earning billions worldwide. Are we experiencing a fossil fuel revival?

Krebber: I don’t see it like that. The world market is currently lacking more than 100 billion cubic metres of Russian gas. Unfortunately, part of that amount now has to be replaced with coal. This means that emissions will probably rise in the next two years. But I also see this as an enormous incentive to invest in green technologies worldwide. In the long term, this will accelerate the energy transition.

SPIEGEL: Do you still have understanding for the climate protests by the “Last Generation”?

Krebber: I have complete understanding for other opinions. What I find difficult is the nature of the protests. We are living in one of the most liberal societies when it comes to freedom of expression. But we have a legal framework. The movement must be careful not to lose public acceptance. Many people are currently worried that they might not be able to keep their jobs here, that they won’t be able to heat their homes, and that prices are increasing. Whether you like it or not, this leads to a short-term reprioritisation between protecting the climate and securing supply.

SPIEGEL: Do you hope that this argument will help you in the conflict that awaits you in Lützerath? RWE wants to tear down the village near the Garzweiler II mine soon.

Krebber: We have found a solution for lignite in North Rhine-Westphalia, which has a broad public consensus: we have to bring power plant units back onto the grid in the short term and need more coal. That said, we will then phase it out twice as quickly as planned.

SPIEGEL: Do you expect there to be a similar escalation in Lützerath to the one in 2018 at Hambach Forest? At that time, there was widespread solidarity.

Krebber: I think there are fundamental differences. Lützerath does not fit this analogy. There is no large forest area, nobody lives there anymore, and the courts have made a final decision. Also, part of the compromise is that nobody in the surrounding villages or farms has to be resettled; we have given up on that.

SPIEGEL: When will the demolition go ahead?

Krebber: I can’t tell you that.

SPIEGEL: But you’ll want to have this problem solved by March. That’s when the clearing season ends, so you won’t be allowed to cut down any more trees.

Krebber: Yes, the schedule has been finalised in all of the reports. We need the coal to supply the necessary quantities of electricity. And we need the soil to recultivate the area.

SPIEGEL: Your exit deal with the federal government stipulates that RWE is to cease generating electricity from coal in 2030, rather than 2038, but in turn two power plants are to operate 15 months longer than planned. Who has the biggest benefit? RWE, because you can break with your image as a fossil giant? Or Robert Habeck, because he can show voters that he hasn’t lost sight of climate protection in spite of the supply crisis?

Krebber: I wouldn’t put it in terms of benefits, as the solution was obvious. I would just like to point out one aspect that you seem to have neglected. For RWE, the coal phase out is a tremendous social challenge. We now need to convince a large number of employees to stay longer – yet we are bringing the exit forward significantly. The adjustment for our employees must start at a higher level and be much faster. We must and will solve this by mutual agreement.

SPIEGEL: Let’s talk about nuclear power. Originally, Robert Habeck didn’t even want to keep your Emsland nuclear plant in reserve, until the chancellor put his foot down. Did you lobby Olaf Scholz?

Krebber: No. A roundtable was held in the Chancellery with the operators, as you also reported. The government presented the facts as the basis for their decision.

SPIEGEL: Facts that had not been heard before?

Krebber: I do not pass on any information from confidential discussions. However, I am sure you have noticed that RWE has largely stayed out of the nuclear debate, unlike other companies.

SPIEGEL: Are you already prepared for the government to ask you to buy new fuel rods next year after all?

Krebber: No. There is a final date for the exit, and I take that as given.

SPIEGEL: In this crisis, new legislation has been appearing on a weekly basis. Until when, in theory, could you order the new fuel rods?

Krebber: That’s pure speculation.

SPIEGEL: No, that’s a question.

Krebber: I won’t get involved in such a discussion because I believe that it is the wrong one. Instead of wasting political capital and energy on a relatively minor amount of generation capacity, we should focus on the expansion of renewables or the development of a hydrogen economy. This is what the future of this country depends on – not on the question of whether four gigawatts of nuclear energy should run for two or three years longer.

SPIEGEL: But all of the problems that were used to justify the extension until April will not have been solved by next year. Especially not the failure of the French nuclear power plants.

Krebber: Extending nuclear power for even longer is complicated, and again, we’d be holding the wrong discussion if we only talk about old technologies!

SPIEGEL: At the end of this crisis, the state will own Uniper and the former Gazprom subsidiary Sefe, hold stakes in LNG terminals and control the consumer prices for electricity and gas. What remains of the liberalisation of the energy market?

Krebber: The measures that you name were all correct. However, in the middle of next year at the latest, once the acute crisis measures have been implemented, this question has to be brought to the table: what is the government’s plan for putting the gas industry back into private hands? As a private-sector company, we can’t continue to compete with state-owned companies.

SPIEGEL: You also spent a long time at Commerzbank, which the state has still not completely withdrawn from. How is an exit supposed to succeed at Uniper, a company that has losses in the billions?

Krebber: That will be very difficult, but at some point the old supply contracts will end. In the worst-case scenario, the government will have to decide whether to sell part of the company first.

SPIEGEL: You like to call on the state for help yourself. As part of the coal phase out, RWE promised to build modern gas-fired power plants by 2030 – on the condition that the government guarantees that your investment is worthwhile in any case.

Krebber: At the moment, nobody wants to build a hydrogen-compatible fgas-fired power plant. The reason for this is that the current market design only provides payment for electricity that is actually produced. However, gas-fired power stations are to remain on standby in the event of a scarcity of electricity if wind or solar are insufficient. So, they would only operate for a few hours. This capacity must be paid for. The coal phaseout will only succeed if there are enough gas-fired power plants available as backup until 2030. For this to work, the remuneration plan has to be defined by the end of next year, or there will not be enough time for construction.

SPIEGEL: So there won’t be any ground-breaking ceremonies unless politicians can guarantee that the operation will be worthwhile.

Krebber: Right. Infrastructure is a basic responsibility of the state. In the UK, this model is already working. We have done the maths: if you transfer these costs to Germany, a backup system here would cost less than three billion euros.

SPIEGEL: The former Minister for Economic Affairs, Sigmar Gabriel (SPD), once dismissively described what you are demanding as “Hartz IV for power plants” – a state welfare payment because of an insufficient income.

Krebber: That expression is simply false. This is not government support. The fire brigade also gets paid so they can be there in an emergency when there is a fire. The private sector is not responsible for organising security of supply. If the public, industry, and the German state don’t want to have that, we simply won’t build any gas-fired power plants. But then we would just spend half a year discussing whether we would have enough electricity in future without coal.

SPIEGEL: Let’s talk about your new co-owners. The Qatari state fund, QIA, was involved in financing your acquisition in the United States, thus becoming the largest single shareholder. Will RWE become the stepping-stone for the Qataris in the German energy industry?

Krebber: No, QIA is a reputable financial investor, who like other large sovereign wealth funds, acts very professionally. I don’t see any strategic double-dealing there at all.

SPIEGEL: Qatar is a major energy exporter, and we are dependent on gas. A Qatari investment in RWE has a different strategic significance to their financial participation in VW or Deutsche Bank.

Krebber: The Qataris have stated that their investment in RWE supports our approach to the energy transition. That is surely a good thing.

SPIEGEL: On the one hand, Germany is begging for gas in Qatar, and on the other hand we are criticising them loudly for human rights violations and working conditions in connection with the World Cup. Do you think these can be reconciled?

Krebber: Of course, we must not turn a blind eye to violations of human rights and terrible working conditions anywhere. But improvements can only be made by maintaining a dialogue. Well-intentioned remarks from the side lines do not achieve anything. The Gulf region can play an important role in Europe’s energy supply. Precisely because we do not want to get involved in one-sided dependencies, we need to strengthen this cooperation – and not leave it to the United States or Asian countries.

SPIEGEL: Mr Krebber, thank you very much for this interview.

 

Interview: Isabell Hülsen and Benedikt Müller-Arnold, © DER SPIEGEL GmbH & Co. KG. All rights reserved.

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