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Swedish company Vattenfall has announced it will sell its German lignite assets to Czech energy group EPH, citing a commitment to sustainable energy. But the sale will likely slow Germany's exit from coal power.
Czech energy company EPH has agreed to acquire Swedish energy company Vattenfall's four German coal plants and corresponding mining assets, which altogether employ around 7,500 employees and produce large amounts of greenhouse gases.
EPH already owns some coal assets in Germany, including Mibrag mining company and the 352-megawatt Buschhaus coal-fired power plant, which emits 2.2 million tons of CO2 annually.
The fate of Vattenfall's coal assets has been a controversial topic in both Germany and Sweden. Coal miners and power plant workers have feared for their jobs as Germany shifted its long-term energy strategy towards renewable electricity generation. Environmentalists, on the other hand, demand that Germany hastens its turn away from coal power.
Hermann Falk, CEO of the German Renewable Energy Association (BEE), told DW that EPH's acquisition was a "highly speculative investment."
"They're speculating on brown-coal power generation's long-term acceptance by German society, on continued support for the industry from politicians, and on its continuing to be profitable," he said.
These are bold bets, with the wholesale price of renewable electricity dropping in Germany and the German government strengthening its commitments to sustainable environmental policy. "The new 1.5 degree [global temperature rise] goal agreed at Paris further increases the pressure to get out of coal," Falk noted.
Vattenfall divesting from coal
"Vattenfall decided years ago to improve its corporate CO2 profile," spokesman Stefan Müller told DW, "and has been pursuing that goal consequentially."
He added that Vattenfall last invested in a major fossil-fuelled generating plant a decade ago, and that it was gradually divesting from fossil fuels in accordance with a corporate commitment to CO2 neutrality by 2050.
Asked whether greening Vattenfall's CO2 balance sheet would have any positive impact on the climate if it was achieved by simply selling its portfolio of lignite coal-fired power plants to another corporation, Müller said the operation of coal-fired power plants was a matter of political policy and not within Vattenfall's bailiwick.
Private business or public policy?
Beate Braams, a spokeswoman for Germany's Federal Ministry for Economic Affairs and Energy, told DW that negotiations did not take place between the ministry and Vattenfall to "investigate possible pathways for switching away Vattenfall's German assets and efforts away from coal toward renewable energy" - for example, by redirecting financial flows generated from electricity sales from coal-powered plants to renewable energy.
"The energy industry in Germany is part of the private sector and corporate strategy decisions of energy corporations are not in the ministry's mandate," she said, adding that Germany's Climate Protection Plan had nothing to do with Vattenfall's divestment. "That's a matter of corporate strategy we cannot comment on."
Vattenfall's lignite-fired power plant Jänschwalde is the fourth biggest polluter in Europe, spewing more than 23 million tons of CO2 every year
Vattenfall, however, is entirely owned by the Swedish government. Greenpeace Nordic spokesperson Annika Jacobsson told DW that this is why it makes a big difference that Vattenfall has sold its brown-coal assets in Germany to a private company like EPH.
"The Swedish government has forbidden Vattenfall to open any new coal mines. That means it can only continue to operate the coal mines it already has, which would be exhausted by about 2030," Jacobsson said.
But EPH is under no such constraint, and it has expressed hope for a "European brown-coal renaissance," Jacobsson said. She pointed to the possibility of new mines in coal-friendly Poland as a possible source of supply.
"These two alternatives are so clear," she said. "EPH is a much bigger risk in terms of continued emissions from lignite-fired power plants."
If governments are serious about meeting the two degree target - limiting global average surface temperature warming to two degrees Celsius, a collective effort agreed upon in Paris - about 90 percent of lignite had to stay in the ground, the Swedish Greenpeace activist noted.
The Swedish government must still approve the sale. Economic Minister Mikael Damberg said Monday that he expects a decision to be made in a couple of months.