RWE

RWE’s core business activities are now offshore and onshore wind, solar, hydro, biomass, gas power generation as well as supply and trading while nuclear and coal power generation are losing importance due to phase out decisions taken by Germany.
RWE will maintain its strategic repositioning as a low-carbon electricity generator by growing its wind and solar capacity to over 13 GWby the end of 2022 and 20 GW by the end of 2030, focusing on markets in Europe, North America and the Asia-Pacific region and developing its expertise across the entire value chain of green hydrogen (from production, to trading, storage and sales).

RWE has set up an absolute net-zero emissions target for all scopes (as opposed to a simple commitment) by 2040 compared with 2012 with an intermediary target of 75% reduction by 2030 for generation-related scope 1 emissions. This absolute target is an improvement against its previous assessment. RWE has also implemented a scope 3 target aiming at a 30% reduction by 2030 compared with 2019. While RWE is on track to achieve its net-zero and scope 1 emissions targets, these are not completely aligned with its 1.5°C pathway. Further, RWE could improve by aiming at being carbon neutral by 2035 as this is the expectation for electricity generation companies with assets in advanced economies.

A significant part of RWE’s research expenditures is found to be allocated to innovative offshore floating wind technologies (such as tubular steel support structure, floating hull technology or floating platform) which give access to more surfaces to implant wind farms. However, RWE’s performance could not be assessed in this module as the company does not disclose sufficient research and development (R&D) figures per technology area. Furthermore, in 2020 only 0.7% of the company’s total capital expenditure (CapEx) was dedicated to mitigation R&D spending which remains far off the sectoral expectation of 5% for electric utilities companies.

If hard coal and lignite plant closure will drive significant emissions reductions in the short term, it is important that RWE keep reducing emissions in the long term. Its ongoing reliance on gas can prevent the company meeting the rapid rate of decarbonisation required by its 1.5°C pathway. Gas is already RWE’s main source of energy and it is increasing the share of gas within its portfolio by buying existing plants (such as the 382 MW King’s Lynn, England, acquired in early 2020) given that new builds are uneconomical under the German Combined Heat and Power Act.
Furthermore, RWE is projected to exceed its carbon budget to 2035 by 40%. The company could strengthen its performance by accelerating the decline in electricity production from fossil fuels assets.

RWE has a target to achieve net-zero for all scope emissions by 2040, with an intermediary target of 75% reduction in electricity production emissions by 2030. It also wants to reduce its scope 3 emissions by 30% by 2030. RWE will increase its wind and solar capacity to 13 GW by 2022 (against 8.7 GW in 2020) and phase out from coal by 2038.

Since the beginning of the 2020, RWE no longer runs hard coal plants in the UK and Germany but has 2 remaining power stations in the Netherlands that will be closed to the latest in 2029. In 2029, RWE’s coal/lignite capacity should be 70% lower than in 2019. RWE plans to reduce scope 3 emissions from hard coal within its supply chain, its refinement and trading businesses.

Between 2021 and 2030, RWE commits to invest EUR 50 billion in deploying offshore and onshore wind, solar, batteries, flexible generation and hydrogenprojects. In 2020, RWE has invested approximately 87% of its CapEx for wind, solar, hydro, nuclear, biomass expansion and only approximately 11% towards gas and coal sources.

Between 2015 and 2020, RWE’s absolute scope 1 and 2 emissions decreased by 52% due to the closure of its coal and lignite plants and the acquisition of new renewable assets. The rate of decrease should be increased by a factor of around 1.4 for RWE to align with its 1.5°C pathway.

RWE’s 34 GW development pipeline of offshore, onshore wind and solar projects coupled to its low-carbon investments could reduce its decarbonisation action gap. However, its potential reliance on coal until 2038 puts the company at risk of undermining efforts to reduce its emissions in the long run.