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Vattenfall's lignite dilemma

October 30, 2014

Swedish utility Vattenfall has said it's planning to get rid of its lignite-powered plants and mining facilities in eastern Germany. Although profitable, the business prevents the firm from reducing CO2 emissions.

Vattenfall lignite-fired plant in eastern Germany
Image: picture-alliance/dpa

Swedish energy company Vattenfall was preparing to exit from its lignite business in eastern Germany where it operated five coal-fired power plants, the firm said Thursday.

It said it was looking for a "new and sustainable ownership structure" in talks with regional authorities in the German states of Brandenburg and Saxony where it employed about 8,000 people.

Vattenfall added it was aware of its role as a major employer, having ordered goods and services to the tune of 600 million euros ($756 million) from 1,700 firms in the region last year alone.

Vested interests

But the Swedish utility said it needed to drastically reduce harmful CO2 emissions in line with the requirements made by the government back home. It noted that its lignite-powered plants accounted for 10 percent of overall annual German electricity generation, but the stations emitted some 60 million tons of carbon dioxide every year.

Greenpeace activists remarked a sale of the power plants would not solve the environmental issues linked to coal mining. They called on Vattenfall to close the plants down and invest much more in renewables in Germany instead.

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Regional trade unions for their part were up in arms on the news, insisting coal mining remained a pivotal element in the country's energy transition, and fearing massive job cuts.

Also on Thursday, Vattenfall reported a net loss of 18.1 billion kronor (1.9 billion euros) for the third quarter, down from a bottom-line profit of 1.6 billion kronor in the same period a year earlier.

New Chief Executive Magnus Hall attributed the steep drop to weak global demand, a surplus of generation capacity and "historically low electricity prices."

hg/bea (AFP, Reuters, dpa)