Vattenfall abandons German coal production to increase sustainability

Vattenfall, the Swedish state-owned energy company, has sold its German coal operations as part of a move towards more sustainable production. The company’s coal based businesses, which employ 8,000 people and made up approximately 10% of Vattenfall’s German power supply, have been purchased by Czech operator EPH. The sale has increased Vattenfall’s climate neutral production from 50% to 75%. Greenpeace had attempted to bid for the coal operations in order to close them. However, Citigroup, which managed the sale, barred the environmental group which it claimed did not intend to make a financial bid. Fossil fuels are increasingly unpopular in Germany. They are also becoming less profitable due to public subsides of renewable projects.

Swedish state-owned energy giant Vattenfall said on Monday it had reached a deal to sell its German coal operations, employing 8,000 people, as it moves away from activities blamed for climate change.

Vattenfall said it would sell its German lignite, or brown coal, business – opencast coalmines and two power plants close to the German-Polish border – to Czech operator EPH.

The coal operations represent about one-tenth of Vattenfall’s power production in Germany, where it is the third-largest energy supplier.

“This divestment of our lignite assets is good strategically but also financially given current and expected market conditions,” said Vattenfall chief executive, Magnus Hall.

“We are now accelerating our shift towards a more sustainable production. The sale means more than 75% of our production will be climate neutral compared to about 50% today,” Hall said.

Vattenfall said the sale of the coal business would have a negative impact of 22-27bn Swedish kronor (€2.4-2.9bn, $2.7-3.3bn) on its second-quarter results, but the hit would have been larger if it had waited longer.

The sale of the coal assets drew few bidders.

Another Czech company, CEZ, withdrew afer expressing initial interest.

Greenpeace, too, had tried to bid for the coal operations with the intention of closing them down. But the environmental group said in November it had been barred from bidding because Citigroup, in charge of the sale, judged that it had no intention of making a financial bid.

There is growing resistance to fossil fuels in Germany. Meanwhile, public subsidies of renewable sources of energy are making coal-fired energy less profitable.