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Green Energy Plans May Not Deserve The Praise They Get

What’s happening? German utility giant RWE has announced plans to close its fossil fuel power stations and invest solely in green energy, to enable it to be carbon neutral by 2040. 

Why does this matter? Carbon neutrality is in vogue, with a growing number of companies and governments pledging to move to net-zero carbon towards the middle of this century. As Germany’s largest utility, RWE’s plans to do the same grabbed headlines. But is it all that impressive, or altruistic?

Through an asset swap with Eon, RWE is now Europe’s third-largest renewables provider, and its plans to grow capacity further should certainly be welcomed.

Its declaration, however, to shut its coal plants could be met with a little more scrutiny. Germany is behind on its climate goals, and has outlined a set of new policies to catch up, including phasing out coal power by 2038. RWE’s plan fits in neatly with this timeline, and it will actually be compensated for shutting its coal fleet – through an auction for hard coal, and a phased shutdown plan for its lignite power stations.

Some have argued, this deal actually works in RWE’s favour in a European market where coal has lost a lot of value.

The real test will come with RWE’s current fleet of 17 gas power stations (10 in Germany). The company’s press release says it is looking for its gas stations to be “primarily fired by ‘green’ gas” in the future. A spokesperson from the company confirmed that, although looking 20 years ahead gives uncertainty, this green gas will likely to form of hydrogen via electrolysis is the company’s current focus.

RWE still thinks it will burn some natural gas in 2040, so will be looking to offset those emissions from other means, possibly through negative emissions from bioenergy and carbon capture and storage, according to the spokesperson.

If every organisation has to rely on offsets to be carbon neutral, will there be enough to cover everyone?

Lateral thought from Curation – Cleaning up existing assets is one approach to eliminate company emissions. Another is to simply sell off the bad ones, as DONG Energy did when it transitioned into the offshore wind company Orsted. Which is the better method? Similar to the different shareholder tactics of divesting versus retaining a seat at the table and adding pressure, perhaps the most laudable approach for utilities is to retain stewardship over their polluting assets, and maintain responsibility for cleaning them up.

Nick Finegold is Founder & CEO of Curation Corp, an emerging and peripheral risks monitoring service.

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