EnBW fears competitive disadvantages from emission rights trad-ing

Karlsruhe. EnBW Energie Baden-Württemberg AG is concerned that the persisting standstill in the negotiations between industry and the government on the details of emission trading in Germany will prevent the implementation of fair procedural rules in this area. "We fear that the talks between the Federal Ministry of the Environment and the Ministry of Economic Affairs will result in a one-sided situation. There is a risk that we will fail to arrive at a fair solution to promote the ecologically desirable goal of emission trading and that this will dramatically distort competition in the energy sector in Germany", the Karlsruhe-based company says.

As the third-largest energy company in Germany and the provider with the lowest specific CO2 emissions in its competitive segment, EnBW takes its responsibilities seriously when it comes to ensuring energy supplies that are both reliable and environment-friendly. "We intend to continue to gear our energy supply operations to the needs of climate protection, and we are therefore also willing to make our own contribution to climate protection, particularly in the context of the planned withdrawal from nuclear power generation. In return, however, we expect the German government to ensure fair conditions and equality of treatment in the national and international competitive arena. This is not about the issue of "investment security" but about equal treatment when it comes to building efficient replacement plants for our nuclear power stations as well as fair conditions for the operation of our conventional power stations. We believe that the current political plans pose a threat to fairness in both these areas", says Professor Dr. Thomas Hartkopf, Technical Director on the Management Board of EnBW AG.

Due to the high proportion of nuclear energy in its overall portfolio, EnBW fears it will be at a "dramatic disadvantage in the competitive arena". The withdrawal from nuclear power generation will result in a lost generating capacity at EnBW of 1,862 Megawatts up to the end of the first two trading periods in 2012. This is equivalent to over 15 percent of EnBW's current installed capacity and 20 percent of the company's current generating volume. "We would like to replace this capacity through new investments in Germany", Professor Dr. Thomas Hartkopf emphasises.

The Federal Ministry of the Environment intends to make generous certificate allocations to older lignite power stations, while investments to replace nuclear power plants will qualify for a far lower volume of emission certificates. "This is unworkable", says Thomas Hartkopf, adding that it is not fair if EnBW is at an additional disadvantage in the area of emission trading as a result of the agreement to withdraw from nuclear energy generation – an agreement which the company, as a reliable partner, will continue to stand by. Hartkopf: "This is tantamount to retroactive punishment of companies who currently have a high proportion of nuclear power in their energy mix – but the agreement on withdrawal from nuclear power explicitly excludes this kind of discrimination."

In line with the current plans, the replacement of old coal-fired power stations will entitle the operator to take advantage of higher certificate levels than the replacement of nuclear power stations. In contrast to the operators of old coal-fired power stations, EnBW would be just as badly placed as a foreign investor if it replaces the nuclear power stations that are to be closed down.

A further problem is that operators of nuclear power stations who replace these with existing conventional power stations will not receive certificates that make up for the added emissions from these power stations. "Our modern conventional power station park will have to take over the energy supply volume of the Obrigheim nuclear power station as early as 2005. This will necessarily result in additional emissions. If we do not receive additional certificates for these emissions, we will have to purchase emission rights from the outset or procure expensive power on the market, possibly from older lignite power stations with even high emission levels", says Hartkopf.

EnBW AG fears that the operators of nuclear power stations will be at a considerable competitive disadvantage as a result of the implementation of the agreed withdrawal from nuclear energy generation. Nuclear energy plant operators who build a single new gas-fired power station could be at a financial disadvantage of several hundred million euros compared, for example, to operators of lignite power stations, who will receive a far higher number of certificates for conversion to gas. Demands for investment security and the strengthening of the status of coal in the German energy mix do not address the core problem. "What we are demanding is equality of treatment in the provisions for old conventional plants and nuclear power stations. This is an absolute precondition for fair competition in the interests of the customer", says Hartkopf. Hartkopf is appealing to the German government to implement a well-reasoned energy strategy: "An excellent instrument like emission trading should not be devalued by the patently unequal treatment of energy suppliers."