Brown Coal

Vattenfall Spurns Greenpeace Bid

Greenpeace is out of the running to takeover Vattenfall's German lignite operations. Source: DPA
Greenpeace is out of the running to take over Vattenfall's German lignite operations.
  • Why it matters

    Why it matters

    Germany’s switch to renewable energy sources is challenging traditional utilities as the value of their facilities is falling significantly.

  • Facts

    Facts

    • Greenpeace Sweden offered nothing to Vattenfall for its German lignite operations and would instead demand money to wind down brown coal.
    • Vattenfall valued its German coal-fired plants at between €2 billion-€3 billion, but the sales price would likely be considerably lower, closer to €1 billion.
    • The company employs about 8,200 people in lignite mining and its German coal-fired power plants.
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    Audio

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Swedish energy provider Vattenfall has rejected Greenpeace Sweden as a possible buyer for the utility’s brown-coal plants in Germany.

The environmental-protection group had expressed interest in acquiring Vattenfall’s German lignite division after the Swedish state-owned utility was ordered by the country’s left-leaning government to divest coal operations in order to reduce carbon-dioxide emissions.

Lignite is a cheap, carbon-heavy fuel also known as brown coal.

Greenpeace, however, was deemed as an unacceptable bidder by Vattenfall’s management. Citigroup, the investment bank involved in the sales process, has now barred Greenpeace as a candidate in the proceedings.

Greenpeace says the “real value” of the Vattenfall division was more than minus €2 billion because of the costs of winding down brown coal operations.

In theory, the Swedish energy company should be happy to have any prospective bidders at all given the reduced profitability of coal-fired power plants. Vattenfall refused to comment on the move to reject Greenpeace, citing confidentiality.

But sources familiar with the situation have confirmed the decision. Greenpeace says that it was informed of its ouster by Citigroup in writing last Friday. The bank justified its step by saying Greenpeace didn’t intend “to act as a bidder.”

The environmental activists, however, have rejected the accusation.

“Of course Greenpeace wishes to act as a bidder,” said Annika Jacobson, Greenpeace Sweden’s program director. But its offer apparently doesn’t fit “the intention of Citigroup to select the buyer solely according to the highest price.”

Vattenfall had initiated the sale of its German brown-coal division in late September. In addition to an open pit mine in the Lausitz region of Germany, several power plants are up for sale.

Two weeks ago, Greenpeace submitted a statement of interest to Citigroup. In a 13-page document, the activist group described its plans to transfer the brown coal operations into a non-profit foundation whose purpose would be “an exit from the generation of electricity through coal by the year 2030 and the restructuring of the firm into a renewable-energy company.”

But Greenpeace also made it clear that it wouldn’t pay Vattenfall anything – but instead was demanding money for phasing-out brown coal. The organization argued the “real value” of the Vattenfall division was more than minus-€2 billion (minus-$2.2 billion) because of the costs of winding down brown coal operations.

Some in the energy industry considered Greenpeace’s move to be a successful public-relations stunt. But Ms. Jacobson emphasized on Monday: “If Vattenfall and the Swedish state are hoping to evade their responsibility by selling the brown coal sector, then a buyer has to submit a concept that gives heed to ecological and social concerns.”

Greenpeace is demanding that Mikael Damberg, Sweden’s minister for economic affairs, ensure “that environmental aspects are given consideration in the bidding process and that Greenpeace Sweden continues to be involved.”

 

Jürgen Flauger covers the energy market for Handelsblatt, including electricity and gas providers, international market developments and energy policy. To contact the author: flauger@handelsblatt.com

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