Following Monday's announcement (18th April 2016) that Vattenfall intend to sell their German lignite assets to EPH, Sandbag has released this paper investigating EPH and their pan-European spending-spree on cheap, dirty power plants and mines.
It is ironic that as major utilities divest from dirty power stations and mines to clean their portfolios, the fossil fuel infrastructure may end up staying open longer, as new corporations with reduced stakeholder pressure take over.
The rise of faceless, unaccountable energy companies like EPH shows flaws in the EU’s faltering 2020 climate and energy package, and the risks of major utilities 'cleaning' their portfolios. The ability of these companies to aggressively cut costs through worker redundancies and pay reductions should be high on policymakers minds; these controversial sales will not save jobs. A measured transition to innovative clean technology is the only way to protect employment in regions such as Lusatia.
EPH can only hope to make money from these assets if high-carbon power continues to fail to pay the real price for its impact on climate change and human health. Policies tightening caps on both CO2 emissions and air pollutants are necessary – currently the low price of both coal and carbon makes EPH’s strategy look attractive in the short term.
The Swedish government now has to approve or deny the sale, which will likely take a few months. Meanwhile, Sandbag has shown that despite the Energiewende the EU's Top Ten polluters continue to be dominated by German lignite, and planned protests against German lignite will continue to disrupt mining operations.
Dave Jones, Sandbag's Carbon & Power analyst comments:
This is a lose-lose-lose situation.
It's a lose for the climate, because EPH are unlikely to implement a just phase-out that Vattenfall could have implemented, meaning the lignite plants are likely to stay open longer than they would have otherwise.
It's a lose for the Swedish government, because it is very likely that the sale price to EPH is so low, that it might even be negative when you take into account liabilities left in Vattenfall. Keeping the assets, and phasing-out generation would arguably be more profitable.
It's a lose for German workers. EPH has a track record in rapidly and aggressively cutting jobs at the plants it acquires, rather than the measured phase-out Vattenfall could implement, aided by German government transition funding for green jobs in Lusatia.
Vattenfall and the Swedish and German governments will be taking a big gamble to hand these assets at a cut-price, or even a negative price, to a faceless organization. EPH have no public shareholders to be responsible to, no electricity customers to be responsible to, and no ownership from regional or national government to be responsible to. With electricity prices so low and lignite so unprofitable, EPH ownership leaves Lusatia's lignite industry in a precarious position, with the possibility it could collapse at any time, with devastating consequences to the local community.