After backing outdated business models that rely on coal, the share values of Europe’s biggest utilities dropped dramatically, reports EurActiv.com.
The Carbon Tracker Initiative has stated that the five largest publicly-listed utilities in the EU lost 100 billion Euros, which is more than a third of their stock market value between 2008 and 2013.
The utilities are Germany’s E.ON, France’s GDF Suez, Electricite de France and Italy’s Enel. These five companies provide almost 60 percent of Europe’s electricity. They have all been downgraded by Moody’s credit rating agency, according to the authors of “Coal: Caught in the EU Utility Death Spiral.”
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The report also states that new coal plants will fail to generate positive cash flows, even in the most best-case scenario, due to changing market conditions for utilities.
These conditions include reliance on coal, renewable policy, technology costs, flat electricity demand and changing customer behavior.
Between 2008 and 2013, the use of coal as a fuel dropped 4.7 percent in total and 4.2 percent in electricity generation. In the same period, the five utilities increased their reliance on coal by 9 percent.
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EU coal-fired generation fell 4.2 percent in the same period of time. Still, the largest utilities maintained significant coal capacity. RWE led this trend by having more than half of its generation capacity based on coal at the end of 2013.
EurActiv.com asked all five utilities for comment on the report, which was published on the day the Norwegian parliament voted to divest its $900 billion sovereign wealth fund from coal. The company’s positions are placed below, provided courtesy of EurActiv.com.
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E.ON said, "E.ON has so far invested almost €10 billion into renewable energies since 2007 and is one of the leading companies in wind-energy world-wide. As a response to fundamental market changes – also triggered by climate change – E.ON announced end of last year a fundamental shift in strategy: The company will split and E.ON will focus on renewables, distribution and customer solutions.
"The spun-off company Uniper will focus on upstream, global commodities and power generation. The future E.ON will be a driver of a low emission environment. The split will be completed next year but already today we are preparing the future set-up in a comprehensive organisational reshuffle. We are confident that investors will recognise our efforts and see their investment in E.ON as a chance to support this fundamental transformation towards renewable energies.
"In 2014 we continued to reduce our total carbon emissions (96 Mio metric tons) – 16 percent less than 2013 - as well as our specific carbon intensity per Megawatt hour (0,43 CO2 in metric tons emitted for each MWh).
"In our view, a carbon ranking based on absolute figures does not help. Specific carbon intensity is a better basis for comparing companies’ efforts in reducing their carbon exposure. Otherwise bigger companies will always rank high in those studies."
Brian Ricketts, secretary general of EuraCoal, the European Association for Coal and Lignite, said, "It is always interesting to read reports from those well-funded organisations who oppose the use of the very fossil fuels upon which our society has been built.
"It is certainly true that coal companies are bleeding. But forgive me for pointing out that the whole energy industry is bleeding. Shares in one of the world’s biggest solar PV companies, Hanergy, have just collapsed by 50 percent. Faced with the sudden fall in oil prices, the oil and gas industry is now slashing its investment programmes. Europe’s largest energy supplier, Russia, is on her knees. The French nuclear industry is now back under the absolute control of the state, after reporting huge losses.
"None of this news should be welcome by anyone; it points to instability, uncertainty and risk. Given this situation, the energy sector now looks to invest only in projects that come with government-backed guarantees: renewables, transmission and distribution, reserve capacity and interconnectors, for example. The dream of a free and liberalised market is fading, to be replaced by a return to central planning.
"EURACOAL itself calls for realism, respect and responsibility during the energy transition. We believe that every energy source plays an important role in society. The messages from too many quarters appear extreme, inciting and unhelpful in a civilised democracy."