Carbon Tracker has produced two separate related reports on RWE and Uniper, the German publicly traded coal utilities, to assess the issues in accelerating Germany’s exit from coal before 2030. RWE is widely held in global asset manager portfolios, particularly those specialised in utilities/infrastructure.

The energy transition is rendering future cash flows from coal generation increasingly uncertain. The transition will be very different depending on activity (coal vs. gas vs renewables), and geography & remuneration (Germany, Netherlands or the UK). In view of such uncertainties, decarbonisation at RWE & Uniper will be increasingly key to equity and debt investor returns.

Our aim is to provide institutional investors and financial institutions with the insights to better understand the issues and to be able to more effectively engage with investee companies, regulators and economic policymakers—highlighting and advocating the implementation of the decarbonisation actions needed.

Examples of required company action are:

1) improve visibility of scope1 (RWE) & ambition of scope3 emissions targets (Uniper)

2) prioritise modernisation of existing, ahead of building new, gas capacity

3) accelerate coal exit raising debt capacity to fund renewables capex

The reports also represent a tool for asset owners to comprehend the challenges and necessary changes that the energy transition imposes on coal fired generation. Given that countries consider coal generators as guaranteeing security of supply, national policymakers and regulators are clearly key stakeholders, and we hope they, too, may benefit from reading the reports.

Chris Moore, Senior Corporate Research Analyst responsible for European Power & Utilities, analyses issues facing both companies including:

  • Can RWE & Uniper deliver on 2030 emissions targets with no interim targets
  • How does Germany’s planned gas build sit with a national target of 100% renewables by 2035
  • Can hydrogen & CCS help get Germany to net zero with low gas & CO2 prices
  • How do RWE & Uniper sustain renewables capex with a decline in cashflows and continued presence in coal
  • Will RWE become a leader in renewables or remain an industry outlier with coal in 2030
  • Is continued Government ownership the best way of getting Uniper to net zero