29 November 2019

Don’t believe the hype: the ‘new’ RWE still fails the Paris climate test

By Guest Author – Katrin Ganswindt, Climate Campaigner, Urgewald

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Executives worked hard to present RWE as a cleaner, greener utility at the launch of it’s new business strategy, but RWE’s attempt to reposition around a 2040 carbon-neutral policy actually locks-in incompatibility with the UN Paris climate agreement. It’s symptomatic of a company cherry-picking the weakest possible business options for maximum splash.

On 30 September 2019, RWE held a press conference at its Essen facility to announce its new business strategy. At its heart was the company’s stated aim to be carbon-neutral by 2040 – an ambition that CEO Dr. Rolf Martin Schmitz described as: “going far beyond what is required by national and international climate goals.” This claim by Mr. Schmitz and RWE is misleading.

On coal, it’s business as usual

When it comes to phasing out coal, RWE re-announced its plan to close its Aberthaw (UK) coal plant in March 2020. Market conditions for coal-powered electricity generation in the UK have long been in decline due to the UK’s highly effective carbon pricing policy, the rapid growth of its renewables market, and its forward-thinking 2025 coal phase-out target. In the Netherlands, RWE said it would continue with plans to refurbish its Amer and Eemshaven coal-powered plants, having been left with little room for manoeuvre by the Dutch government’s coal exit announcement. However, RWE made it clear that it will not go quietly, announcing that it will instigate legal proceedings against the Dutch government for what it perceives as discriminatory losses.

Meanwhile, for Germany, RWE announced that it will track the government’s current coal exit plan with its 2038 coal phase-out policy, despite the knowledge that the coal compromise and the German government’s proposed climate action package are, by its own admission not Paris compatible. When pressed on the issue, Mr. Schmitz grudgingly admitted that RWE still intends to have 4.4 gigawatts (GW) of German lignite online come 2030, meaning RWE will share responsibility for Germany’s failure to achieve its Paris goals.

RWE also re-announced that it will close its Weisweiler lignite plant by 2030, but as the Inden lignite mine that feeds it will run dry by then anyway, this is hardly a proactive decision by a company trying to be responsibly green. RWE also did not outline its intended plans for hard coal nor put forward a socially just, asset level coal exit plan. This means that RWE still falls short of what financiers such as Credit Agricole and others have begun to demand from companies with coal assets.

Coal-to-gas is not a solution

In response to the impending depletion of its coal fleet, RWE also set about to frame gas as a necessary transition fuel. At the heart of this approach was Mr. Schmitz’s claim that renewables alone cannot constitute a safe and reliable source of energy. Instead, Mr. Schmitz outlined RWE’s intention to supply all of its gas-fired power plants with synthetic, renewable gas from 2040 onwards, or to neutralise any remaining CO2 emissions directly or indirectly via CO2 sinks.” Combined with its recent bid for an LNG-terminal in Northern Germany, this suggests that RWE considers expanding non-coal fossil fuels over the coming decades. Nonetheless, offsets have historically been a mistake, and commercially-viable carbon capture storage has not materialised. While in limited cases sustainably produced non-fossil gases (often dubbed ‘green gas’) have been identified as a possible solution for some hard-to-abate sectors (e.g. industrial processes), this is not necessarily the case for electricity generation. To produce large amounts of renewables-based hydrogen, a lot of additional renewable energy capacity is required.

Overall, what is concerning is that RWE’s strategy appears to be based upon 20 more years of expansion into gas. The UN Secretary-General António Guterres stated that all new energy infrastructure needs to be “climate-smart and climate-friendly” from 2020 onwards. RWE’s plan to move from coal-to-gas stands in total contradiction to its declared desire to become a carbon-neutral utility, and threatens to lock-in high carbon-intensive infrastructure that would quickly become stranded assets.

Planned expansion in biomass incompatible with new ‘carbon-neutral’ pathway

RWE has also set its sights on biomass as an alternative route away from coal. It currently uses wood pellets sourced from the U.S. and the Baltic states to co-fire its two Dutch power stations, Amer and Eemshaven. In both cases, suppliers rely on clearcutting natural forests, destroying vital biodiversity and carbon sinks. For biomass to be a sustainable resource, it must meet extremely strict sustainability criteria. In the absence of these, bioenergy can increase greenhouse gas emissions and air pollution. Biomass conversions can also often prolong the life of outdated coal plants. Given all this, large scale use of biomass, cannot be considered a strategy compatible with a serious commitment to carbon neutrality.

‘New’ RWE still bent on destruction

Arguably the most damning indictment of the ‘new’ RWE is that it is still intent on pressing ahead with its plans to destroy villages and the ancient Hambach Forest in North-Rhine Westphalia. In February 2019, the German Institute for Economic Research published a report showing that in the case of a 2038 German coal exit, there would only be time to burn a small amount of lignite that RWE hopes to extract. RWE is pressing ahead nonetheless. In response, the villagers have vowed to take whatever legal steps possible to halt the destruction. At the same time, RWE is also embroiled in a political scandal over the improper eviction of protesters from the Hambach Forest. Details uncovered by investigative reporters appear to show an agreement between the provincial government and RWE for the police to evict protesters at RWE’s behest. While that story is still unfolding, RWE is itself aggressively suing activists at the same time as facing a series of lawsuits related to its business and business practices.

Conclusion

RWE appears to be transitioning, but as slowly as possible, and only when pressed by political developments. Mr. Schmitz admitted as much when stating that RWE will obey society’s wish for a 100 percent renewable global economy. RWE needs to understand that to be a genuinely green utility, the only answer is to close all of its coal facilities, refrain from expanding into gas, and invest in sustainable renewable energy systems such as smart grids; energy efficiency and waste heat recovery technologies; and effective demand-side management. Instead, RWE appears to embrace weak climate policies. This is particularly apparent in the way it uses conformity with the German coal compromise to shield itself taking climate action that would be in line with the UN Paris climate agreement. After all, RWE knows that the coal commission’s 2038 phase out is roughly equal to a business as usual pathway.

The German government is currently in the process of drawing up its coal exit law. If RWE wants to show genuine climate leadership, it should begin by agreeing to close down 3.1GW of lignite – thereby ensuring the villages of North-Rhine Westphalia will be spared from destruction – and publicly offer to exit coal sooner (by 2030). 1.4 million people took to the streets for the September climate strikes and the German government is well aware that there is widespread dissatisfaction with its proposed climate measures. By publicly offering to exit coal sooner, RWE would forge an opening in the political debate that the government would be unable to ignore.

It is important that companies with a significant fossil fuel footprint, like RWE, announce business plans to go carbon neutral. But the policies that underpin their strategy must be credible. In the case of RWE, they are not.

Don’t believe the hype: the ‘new’ RWE still fails the Paris climate test

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