RWE says unlikely to repeat record CO2 output of 2012

Tue Mar 5, 2013 8:30am EST

Related Topics

* Group's power output seen sharply lower this year

* Brown coal generation in 2012 was boosted by a new plant

* Old, CO2-intensive capacity has now been phased out

By Vera Eckert

ESSEN, Germany, March 5 (Reuters) - The modernisation of German utility group RWE's brown-coal-fired power plants makes it unlikely that Europe's biggest carbon dioxide emitter will this year repeat its 179.8 million-tonne CO2 output in 2012, RWE said on Tuesday.

RWE's huge demand for CO2 certificates factors in the EU's mandatory carbon trading scheme (ETS), which requires that power generators cover their output with emissions allowances.

"We will see lower CO2 output because we should have lower brown-coal-to-power output this year, looking from today's point of view," chief financial officer Bernhard Guenther told a news conference on the release of 2012 group results.

He added the RWE group overall needed to buy relatively more certificates for 2013, as the ETS stipulates that formerly allocated certificates must be bought at an auction from 2013 onwards.

Much of this had been bought ahead some 12 to 18 months ago at higher CO2 prices than they were currently, he said.

By the same token, RWE had been able to sell in advance much of 2013 power output at more lucrative prices than today's.

Nevertheless, the earnings loss arising from the ETS and Dutch and British CO2 taxes was expected to amount to 1.2 billion euros this year, as 45 percent of its total capacity is based on CO2-intensive coal.

"This (CO2) leaves its mark on your profit and loss account," Guenther said.

RWE expects total 2013 earnings before interest, taxes, depreciation and amortisation (EBITDA) of 9 billion euros.

CO2 prices in the EU have lost 45 percent of their value in the past 12 months <0#CFI2:> due to the global economic slowdown and little progress by nations to cut climate-harming emissions, which helps big emitters.

But power revenues have fallen as wholesale price in the German core market are currently near eight-year lows, due to overcapacity and an unhindered expansion of renewable energy, where operators are heavily subsidised.

The special effect boosting RWE's CO2 output last year was a new brown-coal block of 2,100 megawatts (MW) at Neurath.

This began producing last summer while not all of the 16 old 150 MW blocks it is replacing were closed, helping to push up group CO2 output up 11 percent year-on-year. The old units were shut down by the end of December.

RWE is also still reeling from the enforced closure of its Biblis nuclear units of 2,525 MW in 2011 in Germany's quicker-than-planned nuclear exit, triggered by the Fukushima disaster in Japan in 2011. Nuclear energy is virtually CO2-free.

Power production by the group rose 10 percent last year to 227.1 billion kilowatt hours (kWh) but 2013 output was forecast to be sharply lower.

The group's shortage of carbon permits last year widened by 29 percent to 58.4 million tonnes, the annual report showed. It had been allocated 121.4 million tonnes of CO2 permits for free, 4.8 million more than in 2011. (Editing by James Jukwey)

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