Cuddling coal

2 July 2015 By Olaf Storbeck

A costly compromise protecting carbon-heavy lignite has sent RWE shares up 5 pct. But it puts Berlin’s ambitious 2020 emission goals at risk. Angela Merkel’s green credentials are suffering just when she needs them to push for consensus at December’s crucial Paris climate summit.

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Shares in Germany’s second-largest utility RWE rose more than 4 percent to 10.14 euros in early trading on July 2 after the German government decided against a proposed new carbon levy on old and emission-rich lignite power plants.

Instead, the government decided to mothball lignite-fired plants with a capacity of 2.7 gigawatts, or about 13 percent of the overall lignite capacity. It is unclear whether and how much the owners of the plants - primarily RWE and Vattenfall Europe - will get compensated for mothballing the plants.

In an attempt to meet the 2020 target of lowering emissions by 40 percent relative to 1990, the government agreed to spend an additional 2 billion euros on climate change measures.

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