Greenwashing Files: RWE

The reality

In 2018, RWE’s renewables business amounted to about 5% of its total energy generation. In late 2019, RWE bought a significant set of existing wind and solar energy assets from E.ON – the company did not achieve this growth by building new renewables capacity. Although it has grown its renewable energy operations further recently, and invested most of its capex in wind and solar in 2020, this still makes up the minority of RWE’s business.

In 2020, nearly 80% of the electricity RWE generated was from non-renewable sources: mostly hard coal, brown coal and fossil gas. This compares to nearly 90% in 2019 and around 95% for the preceding 10 years, during which RWE failed to transition its business to renewables. RWE counts carbon-intensive wood biomass as ‘renewable’ alongside true low-carbon generation sources like wind and solar. RWE also bought about a quarter of its electricity from other suppliers in 2020, but does not include these in its electricity generation statistics.

According to a March 2021 study commissioned by Greenpeace, RWE is still the largest emitter in Europe with 89 million tonnes of Scope 1 emissions from its power stations. The study found that in 2019 RWE’s CO2 emissions per kWh of electricity was 792g/KWh – nearly twice that of Germany’s electricity average.

Although the company calls brown coal “reliable, safe and cheap” and despite RWE’s claim that their targets for 2038 phase-out are “in line with the Paris Climate Agreement”, analysis shows that OECD countries like Germany must entirely end coal generation much earlier in order to meet the Paris Agreement’s 1.5C target – by 2030 at the latest.

The Climate Action 100+ Net Zero Company Benchmark scores RWE’s plans for scaling back fossil gas capacity at just 35%, and coal capacity at just 34%, of what is needed to align with the International Energy Agency’s ‘Beyond Two Degrees’ scenario. In this scenario, total temperature rise is limited to 1.75°C by 2100. More and quicker emissions reductions would be required to limit temperature rise to the Paris goal of 1.5°C and to avert more climate harms to people and to the environment.

Whilst the Benchmark scores RWE as ‘slightly ahead’ of the sector average on reducing its share of coal power, it finds RWE to be ‘behind’ its sector on gas.

Fighting coal phase-out

RWE’s dogged persistence in digging up and burning brown coal despite its green PR shift and investment in renewables has come under particular criticism. Although it has significantly cut its coal power in recent years in the face of coal phase-out campaigns and laws, in 2020, the company used brown coal to produce and sell 25% of its electricity, compared to 20% from renewables (which itself includes carbon-intensive biomass).

Brown coal is one of the highest emitting fuels, generating around 20% more carbon dioxide than regular coal and 40% more than crude oil for the same power output. RWE generated about a third of its electricity in 2020 from brown coal and from hard coal. It operates three controversial ‘opencast’ coal mines in the German Rhenish area – Garzweiler, Hambach and Inden – which carve away expanding swathes of countryside.  RWE’s website continues to promote brown coal as a “valuable raw material” which “will remain vital in the future, too - as a partner in the energy transition”.

RWE’s brown coal mines in Garzweiler and Hambach have been the subject of long-standing protests against RWE’s ambition to destroy the last remaining piece of an ancient forest. RWE’s mining activities also are responsible for the expropriation of local communities. RWE’s brown coal mines in Garzweiler and Hambach have been the subject of long-standing protests against RWE’s ambition to destroy the last remaining piece of an ancient forest.  RWE’s mining activities also are responsible for the expropriation of local communities.  Residents are fighting eviction and the destruction of their villages to make way for the company’s plans to expand the huge Garzweiler coal mine with a campaign launched as RWE announced “day one for the new RWE” (risking a ‘PR nightmare’ for the company). The villagers question whether their displacement is really necessary, as the world struggles to combat the climate crisis. The company admits that the need to carry on mining coal “was called into question by a few people earmarked for resettlement”, but residents are determined to fight their forced expropriation in the courts. In December 2020, a German government analysis created a scandal as it suggested that even without a coal phase-out law, declining demand for coal was likely to mean that some of RWE’s plans to destroy villages were unnecessary.

RWE says it has now reluctantly accepted the German government’s coal power phase-out deadline of 2038, although it also calls the climate phase-out “far disproportionate”. RWE’s CEO proposed the German government pay the company compensation of over €50 billion for closing its unprofitable coal operations, although the reported value of the entire company was only $18 billion in 2020. After intense negotiations, the government agreed to pay €2.6 billion Euros in compensation, a sum that has been criticized for being too high. Its calculation has not been made transparent to the public. One study found that, if RWE had decided to halve its coal power operations in 2018, it could have saved at least $100m of expenditure needed to bring ageing and increasingly unprofitable coal plants in line with 2021 emissions limits. 

In February 2021, RWE drew strong criticism for obstructing the energy transition by bringing arbitration proceedings against the Netherlands, seeking billions of Euros in compensation for the Dutch government’s decision to phase-out coal power generation by 2030 in an effort to reduce the country’s emissions in line with climate goals. The company said that it supports the Dutch emissions reduction target but wants compensation for the disruption to its property from coal phase-out. Campaigners pointed out that RWE commissioned one of its Dutch coal plants in 2015 when a coal phase out was foreseeable, and then sought compensation from taxpayers for closing it. Back in 2015, when the plant was commissioned, RWE’s Annual Report noted that the Dutch government was committed to exit coal power generation. ClientEarth commented that the company’s poor business decisions could not be addressed by shifting losses from stranded assets onto governments and taxpayers.

Forest biomass

The company has decided to convert two major coal plants in the Netherlands – Amer and Eemshaven – to burn wood biomass, a controversial and carbon-intensive fuel, alongside continuing to burn coal (‘co-firing’). Although coal only makes up 15% of the fuel for Amer power plant, at Eemshaven it still accounts for 85%. Dutch taxpayers foot part of the bill through state subsidies, although RWE’s Annual Report complains that “[t]o date, there have been no prospects of an increase in these funds” to cover the cost of converting the plants to 100% wood biomass.

Burning wood biomass produces significant levels of CO2, and scientists warn that replacing coal power with wood biomass is actually likely to mean more carbon intensive electricity, not less. Scientists have also expressed fears that increased use of wood biomass would "seriously threaten" forests, a vital carbon sink which remove CO2 from the atmosphere, contributing to a net increase in GHG emissions. Under carbon accounting rules and EU law, the high CO2 emissions from burning wood biomass are counted as zero on the basis that CO2 losses are counted where the wood is harvested. This accounting rule is controversial, but does not mean that biomass is in reality ‘low-carbon’ or ‘carbon-neutral’.

Because of this, scientists warn that biomass risks worsening climate change. In February 2021, hundreds of scientists wrote to world leaders warning that biomass is a “false solution” to climate change because it too often is a cause of logging rather than being purely a paper and timber industry by-product. The scientists said that:

...government subsidies for burning wood create a double climate problem because this false solution is replacing real carbon reductions. Companies are shifting fossil energy use to wood, which increases warming.

RWE counts wood biomass as around a quarter of its ‘renewable’ energy generation in 2020, having nearly doubled biomass generation compared to 2019. The company’s strategy for reaching its targets includes reliance on “zero carbon renewable energy” and “the use of carbon-neutral fuel to produce electricity", but wood biomass isn’t likely to be either zero carbon or carbon neutral in reality. In July 2020, an expert advisory body to the Dutch government said that biomass electricity generation in the Netherlands, where almost all of RWE’s biomass operations are, should be phased out as soon as possible.