Coal Plants Get Creative: Ditching Dirty Assets to Polish Up Their Image

Germany: Germany Coal companies are undertaking efforts to improve their public image, following the lead of large multinational miners. However, some critics are worried that these restructuring plans may result in a rise of emissions. The second largest Coal miner in the country has announced its intention to separate its dirty operations from renewables, a move that is like those made by fossil-heavy corporations such as Teck Resources Ltd. and Anglo-American Plc. These companies have also taken steps to restructure their businesses by removing Coal assets from their books, instead of closing them down completely.

Risk of owners of polluting assets spinning off their dirty businesses and continuing to operate them with less focus on sustainability is being closely examined. With companies looking for more favorable financial options, there is concern that these polluting assets will be removed from their books without sufficient consideration for environmental impact. This could lead to increased emissions and other harmful effects due to a lack of accountability and incentives to go green. The financial sector must take a more active role in pressuring operators of Coal-fired power plants and other polluting industries to prioritize sustainable practices and divest from their "dirty" business. Failure to act now could have devastating consequences for both the environment and public health.

Coal operators are exploring the option of divesting their polluting assets to improve their financial standing. This trend has been in practice among large multinationals for some time, with Anglo American being one of the companies completing the demerger of its South African Coal business in 2021. Recently, German Coal operators have also begun to follow suit. While there are concerns that this move could lead to an increase in emissions, financial institutions such as banks, investors, and insurance companies are increasing pressure on Coal-fired power plant operators to divest from their "dirty" businesses. It is crucial for these operators to prioritize sustainable practices to mitigate potential risks and contribute towards a cleaner, greener future.

German utility RWE AG, the country's largest Coal operator, faced pressure from an activist investor to separate its lignite unit from its clean-energy operations last year. However, the proposal was voted down by other shareholders. In October, RWE announced plans to phase out Coal by 2030 - eight years earlier than initially planned - and is considering spinning off its lignite operations into a state-run foundation. Interestingly, the push in Germany for separation of green and Coal operations is coming from small shareholders and municipalities rather than big investment or pension funds. For instance, STEAG, a hard Coal burning company owned mainly by communal utilities, has been working on separating its green operations since last year and announced the creation of its renewables subsidiary Iqony in January. However, its Coal assets will continue under STEAG Power GmbH.

Oph Dollhausen, Head of Communications at Iqony, adopting sustainable business practices can provide numerous benefits, including increased visibility, easier access to bank financing, and improved customer acquisition. However, there may be unforeseen consequences when it comes to emissions. For example, in 2016, Vattenfall AB sold its lignite operations in eastern Germany, which wiped out 57 million tons of annual CO2 emissions from its portfolio. Yet, when the assets were bought up by EPH, the already mothballed Coal plants were restarted during last year's energy crisis, indicating that emissions did not simply vanish.

The German government's plan to phase out Coal-fired power generation by 2038, EPH, a Czech-based energy conglomerate, has made it clear that it will continue to burn Coal until then. This is concerning given the negative environmental impact associated with Coal usage, particularly regarding greenhouse gas emissions and air pollution. It is important for companies like EPH to consider more sustainable energy alternatives, and for governments to incentivize such transitions towards a cleaner energy future.