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Andreas Renner, Karlsruhe The energy providers’ commitment to climate protection Energy goals need to be more stringent
42 by Andreas Renner, Director of Public Affairs, Energie Baden-Würtemberg (EnBW), Karlsruhe
EnBW’s commitment to climate protection is primarily determined by a combination of incentives derived from a) opportunities for new business models and the development of new markets to b) the increasing sensitivity of investors towards sustainable corporate strategies and investments. Both factors result from consumers’ attitudes and customers’ expectations that have changed discernibly over the past 30 years as well as international, European and national climate legislation and regulation which in turn is a result of peoples’ increasing awareness towards consequences of uncontrolled man-made climate change.
Fundamental adaptations are crucial to survive Having relied on conventional and nuclear power plants as well as oligopolistic market structures for decades, German utilities had to undergo fundamental adaptations to both market liberalisation and the “Deutsche Energiewende” (German energy transition). With the irreversible political decision in 2011 to phase-out nuclear energy in Germany by the end of 2022, falling wholesale electricity prices due to an increased power generation from renewable energy sources and European and national climate goals that would lead to a phase-out of most conventional power units in mid-term a new strategy was key to survive. EnBW was the first of the former big four utilities to initiate a process that led to a fundamentally new corporate strategy: by 2020, EnBW’s profits (Adjusted EBITDA) will stem from grids (1 billion euros, +25% compared to 2012), renewable energies (0.7 billion euros, +250% compared to 2012) and sales including new energy services like e-mobility (0.4 billion euros, +100% compared to 2012). Generation from conventional and nuclear power plants, as well as trading, will decrease by 80% from 1.2 billion euros to 0.3 billion euros.
Climate goals need to be more ambitious EnBW plays an active and progressive role in the German energy transition. As the only vertically-integrated utility, – meaning that it covers the entire power and gas supply chain from generation via transmission to sales – EnBW positions itself politically as a reasonable voice balancing the security of supply, competitiveness and climate protection. With regard to the latter, the company calls for more ambitious goals, especially at European and national levels. Among companies from different sectors and NGOs, EnBW signed various declarations supporting climate protection goals derived from the 2015 Paris Agreement and United Nations Climate Change conferences. Part of the endorsement is a call for an improved, ambitious Emission Trading Scheme (ETS) as the key instrument for a cost-effective way of reducing GHG emissions without significant government intervention. Ideally, such a scheme includes as many countries as possible. However, the reality is that international agreements on far-reaching instruments such as an ETS will most likely not be implemented in time to serve the climate goals appropriately. Therefore, it is advisable to either reform the European ETS or, if politically unattainable, to form a coalition of willing. EU Member States like e.g. Germany, France, the BENELUX countries and Austria could simultaneously implement national pol
Andreas Renner
Photo: © EnBW
is Director of Public Affairs at Energie Baden-Württemberg AG (EnBW). He holds a degree in Public Administration from the University of Konstanz. Mr Renner has held various management positions at EnBW since 2006. Prior to this, he was Minister for Labour and Social Affairs of the State of Baden-Württemberg, and from 1993 to 2005 Lord Mayor of the City of Singen.
icies fostering a higher CO 2 price. This can be introduced in stages. Both a fixed markup on the market price or a specific price target as a minimum price are plausible. A clearly defined path to a concrete price target provides all market participants with a high degree of planning security – whether for decommissioning or conversion planning for coal-fired power plants (e.g. from coalfired to gas-fired), or for investments in renewable energies. In order not to put an additional financial burden on the population, the state’s income from the CO 2 pricing scheme could be offset by a reduction in the electricity tax. The special case of energy-intensive industries in international competition should be countered by exceptions from the abovementioned system.
Investing in climate protection and sustainability In recent years, questions of climate protection and sustainability have become more and more important on capital markets. Pension funds, large investors and sustainably oriented investors seek more information and transparency with regard to climate risks in companies’ portfolios. These include both the effects of climate change on the business models of the companies and the impact of their activities on the climate. On this basis, investors are already deciding on investments and loans. The relevance continues to increase. In June 2017, the International Task Force on Climate-related Financial Disclosures (TCFD) published its final recommendations to strengthen the climate-related risk reporting of companies. With the participation of EnBW CFO Thomas Kusterer, this working group, set up by the Financial Stability Board (FSB), developed practical recommendations for the disclosure of climate-relevant data. The aim of the working group headed by Michael R. Bloomberg is to establish the topic of climate change and the resulting opportunities and risks in the annual and financial reports, to establish uniformity between the reporting companies, and to make forward-looking statements on the robustness of business models. EnBW included the TCFD recommendations in its integrated annual reporting for the first time in the 2017. Commitment to climate protection has become an indispensable factor in EnBW’s current and future business model. Business activities are in line with international, European and national climate protection goals. However, a more ambitious German government would not hurt.
EnBW’s new strategy
• Over the last five years, due to a lack
of profitability, EnBW shut down con
ventional power plants with a capacity
of 1,720 MW 1
–mainly coal-fired (959
MW), but also gas-fired (342 MW) and oil-fired (426 MW). • Power generation from fossil fuels decreased from 26.3 TWh in 2013 to approximately 22.7 TWh in 2017, representing a 14% drop.
• Not taking into account nuclear power plants, EnBW’s power plant fleet had specific CO2 emissions of 606 g/kWh in 2015. The goal is to reach 484 g/ kWh in 2020 which would translate to a 20% decrease. • In 2017, EnBW avoided greenhouse gas (GHG) emissions of 6.57 megatonnes (Mt) through power generation of renewables and pumped storage plants with natural
inflows. By 2020 approximately 8.8 Mt are targeted. • In addition, EnBW aims to increase its power generation from renewable energy sources to 40% of its total power production by 2020.
1
Due to their relevance for the security of supply system they are currently incorporated in the German power plant network reserve
