Germany to be hit by Vattenfall′s coal-ateral damage | Business| Economy and finance news from a German perspective | DW | 28.04.2015
  1. Inhalt
  2. Navigation
  3. Weitere Inhalte
  4. Metanavigation
  5. Suche
  6. Choose from 30 Languages


Germany to be hit by Vattenfall's coal-ateral damage

Swedish energy group Vattenfall has reported a steep drop in quarterly profits and announced job cuts. In Germany, the company wants to sell its lignite-fired plants, but one research institute has an alternative.

State-owned Vattenfall of Sweden reported Tuesday it would have to slash about 1,000 jobs of a global workforce of 30,000, citing a hefty plunge in first-quarter earnings.

The company announced a 42-percent drop in bottom-line profits in the first three months of the year to 4.68 billion kronor ($542 million, 499 million euros), compared with the same period a year earlier.

Chief Executive Magnus Hall said reducing costs was the order of the day: "Demand for electricity remained weak during the first quarter of the year, and electricity prices have continued to fall."

Besides operations in its home country, Vattenfall is active in Finland, Denmark, the Netherlands, Britain and Germany.

Last year alone, electricity prices fell by an average of 22 percent in the Nordic countries, while in Germany they dipped by 13 percent.

Bye-bye, Lusatia?

Vattenfall's quarterly results came as the company continued its efforts to get rid of its lignite-fired plants in the region of Lusatia in eastern Germany where currently some 8,000 people are employed in open-cast mining and at the power plants themselves.

Running those plants is no longer a lucrative business for the Swedes, with the medium and long-term prospects for coal looking dim in a nation that has pledged to reduce its CO2 emissions by 40 percent by 2020.

In addition, there's growing uncertainty over a proposed German coal levy that Economy Minister Sigmar Gabriel has suggested as a penalty for the oldest and dirtiest coal-fired plants. The idea is to encourage additional encouragement to cut harmful emissions.

Utility companies, trade unions, and regional authorities in the states of Brandenburg and Saxony have been up in arms against the idea, though, pointing out that such a move could cost thousands of jobs right away.

Gabriel has tried to calm them down, saying that a study has been commissioned to look into the potential impact of a levy.

"Should it in fact confirm the misgivings [by unions] of an industry meltdown with a considerable loss of jobs, then the Economy Ministry will of course change its proposal to achieve its climate targets," Gabriel said.

Open-pit lignite mining in eastern Germany

There's no denying the heavy ecological footprint of coal mining

Vattenfall seems unwilling to wait for too much longer, hoping to find a new owner for its lignite-fired plants in Germany soon. The company has frequently emphasized it needs to explore avenues leading to a greater emphasis on renewables so as to drastically reduce its emission footprint.

Weighing the options

A fresh study commissioned by Greenpeace and compiled by the Berlin-based Institute for Ecological Economy Research (IÖW) has called on Vattenfall to stay in eastern Germany and gradually switch to renewables.

The survey claims that such a switch to environmentally friendly energy sources - to be completed by 2030 - could keep most of those in employment who would otherwise still be working in the coal industry then.

Co-Author Katharina Heinbach warned in an interview with DW that little would be gained by Vattenfall selling its Lusatia assets to somebody else.

"This is because the new owner would then be interested in keeping the coal-fired plants operational as long as possible," Heinbach explained, "and that's not what's required."

Instead, the study encourages Vattenfall to keep committed to the area by switching to renewables and creating future-oriented jobs.

"Some 4,000 new jobs could be created in the region that way, and there wouldn't be many more jobs in coal mining there anyway by 2030 because of the nation's ambitious climate targets," Heinbach argued.

Playing pranks

There are so signs, however, that Vattenfall might heed such calls. Earlier this month, a press release allegedly coming from the Swedish company caused much confusion. It said the firm would definitely stay in eastern Germany and would rely heavily on the prospects of renewable energy generation.

"Vattenfall stays in Lusatia and is to become the most sustainable company active in the whole of Germany," the message read, adding that the firm would invest some 10 billion euros until 2030 and retrain up to 6,000 employees to take jobs in the renewables business or regional tourism.

The news spread like wildfire - much to the chagrin of Vattenfall, who said the press release and the website it appeared on were fake.

Greenpeace spokesman Gregor Kessler told German public broadcaster rbb that while it may have been responsible for many things in the past, it was not behind that sort of misleading message.