German power giant RWE, Europe’s biggest emitter, aims for zero carbon by 2040

RWE CEO Rolf Martin Schmitz attends a company's press conference in Essen, Germany, 30 September 2019. Germany's largest brown coal power producer RWE becomes a producer of green electricity. RWE takes over the renewable energies of its former competitor Eon. [EPA-EFE/FRIEDEMANN VOGEL]

German energy giant RWE said Monday (30 September) it aims to achieve carbon neutrality by 2040, winding up fossil-fuel activities while building up renewable generation, after taking over parts of competitor E.ON.

Highly-polluting brown coal and nuclear “laid the foundations we are building the new RWE on… But every form of energy has its time,” chief executive Rolf Martin Schmitz said in a statement.

A massive exchange of assets with E.ON, which will see RWE specialise in electricity generation and its former competitor focus on grids, is the first step in a new strategy.

RWE plans to spend €1.5 billion per year on “both offshore and onshore wind turbines as well as photovoltaics and storage”.

That spending could mount to two or €3 billion per year if contributions from partners are counted in.

After a green light from the European Commission, Monday was the first day E.ON’s former renewables activities were integrated with RWE, alongside generation capacity from RWE’s former subsidiary Innogy.

RWE, E.ON reshape German power sector in Innogy asset swap deal

Germany’s top utilities yesterday (11 March) announced plans to break up Innogy, whose assets will be divided among parent RWE and rival E.ON in the sector’s biggest overhaul since a landmark move to exit nuclear power.

Asset swap

The transfers mean the company is now Europe’s number three in emissions-free electricity, after Spain’s Iberdrola and Italy’s Enel.

As well as building up new renewable capacity, RWE plans to shutter or convert all of its coal-fired plants in Britain and the Netherlands by 2030.

Meanwhile, it said it would stick to the 2038 target for ending coal generation in Germany set by a government-appointed commission earlier this year.

It is currently in talks with Berlin over compensation for those closures, totalling around three gigawatts of capacity by 2022.

RWE reduced emissions of greenhouse gas carbon dioxide (CO2) by one-third, or 60 million tonnes, between 2012 and 2018.

It aims to further slash output by 70% between 2019 and 2030.

German coal plant exposed as Europe’s single worst air polluter

The Niederaussem coal plant and mine, operated by RWE, was singled out as Europe’s largest hotspot for Nitrogen Dioxide (NO2) pollution, according to a groundbreaking analysis of new satellite imagery. London’s polluted air, caused mainly by transport emissions, comes second.

Environmentalists welcomed RWE’s move towards carbon neutrality but said further steps were now needed in order to put it into practice.

“As Europe’s largest single emitter, we believe that this ambition needs to be matched with a science-based target that ensures that decarbonisation for the company happens in line with the goals of the Paris agreement,” said Steven Tebbe, Managing Director of CDP Europe, a financial watchdog based in the UK.

Tebbe said other firms like Orsted, Iberdrola, and Enel have already science-based targets in place and have recently committed to decarbonise at the pace required to limit warming to 1.5°C.

“German policymakers must also play a major role in driving faster decarbonisation, by setting bolder national climate targets, procurement policies and a framework for the energy market which deliver an environment for faster progress,” Tebbe said.

German power deal spells demise of the integrated utility model

An all-German deal to split Innogy between RWE and E.ON looks set to create a template for European utilities M&A that includes the demise of the integrated model, no more big cross-border deals and a quest for emerging market growth.

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