Volkswagen will extend coal-fired power as Russia’s concerns continue

Covering an area of ​​6.5 million square meters, VW’s huge production plant in Wolfsburg uses two CHP plants that supply it with heat and electricity.

Krisztian Bocsi | Bloomberg | Getty Images

The CEO of Volkswagen He told CNBC on Wednesday that the German auto giant was keeping its options open in terms of how it powers its huge manufacturing plant in Wolfsburg, admitting coal would still be needed due to ongoing tensions between Russia and Europe.

Speaking to CNBC’s Annette Weisbach, VW chief Herbert Diess was asked how concerned he was about the disruption of gas supplies from Russia and what it would mean for his company’s operations.

“This is really a threat … because it’s very difficult to predict what’s going to happen,” Diess said. “Here in Wolfsburg we still have coal-fired power plants that we wanted – and are – converting to gas.”

Covering an area of ​​6.5 million square meters, VW’s manufacturing plant in the city of Wolfsburg uses two CHP plants that supply it with heat and electricity.

The company had planned to replace its coal-fired boilers with gas-and-steam turbine units in an effort to reduce carbon dioxide emissions, but global events appear to have prompted an afterthought for the time being.

“Everything is ready, but now let’s hesitate a bit and see how the situation develops,” Diess said. “We can [adapt] … to the situation. We can [for] a little, we extend our coal plants, hopefully not for too long. So we would like to switch to gas once the supply is secured. “

on Wednesday, Reuters also sued Diess for telling reporters that VW had “just decided to upgrade our coal-fired power plants to still be able to use coal or gas,” adding that this concerned the company’s core operations in Wolfsburg.

VW reported results for the first quarter of 2022 on Wednesday. Operating profit before special items reached € 513 million (approximately $ 541 million), up from € 490 million in the first quarter of 2021. The company reported sales of just under $ 15 billion. euros compared to 17.6 billion euros in the first quarter of 2021.

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Diess’s comment came on the same day that the European Commission, the EU’s executive power, put forward new sanctions against the Kremlin. this will include a six-month phasing out of Russian crude oil imports.

“We will phase out Russia’s supply of crude oil within six months and of refined products by the end of the year,” said Ursula von der Leyen, president of the European Commission, in a speech outlining the plans.

“Therefore, we maximize the pressure on Russia, while at the same time – and this is important – we minimize collateral damage to us and our partners around the world,” he said. “Because to help Ukraine, we need to make sure our economy stays strong.”

Last year Russia was the main supplier of oil and natural gas to the EU, according to Eurostat. In late April, the Russian state energy company Gazprom cut off supplies to two EU nations, Poland and Bulgaria, because they refused to pay for gas in rubles. The move has led many to fear that other EU countries may also see their supplies cut off.

Geopolitical instability, volatility in energy markets and the Covid-19 pandemic have raised concerns in some quarters that any transition to a global economy focused on renewable energy may be delayed or prevented.

Wednesday morning, during an interview with “Squawk Box Europe”, the CEO of the shipping giant maersk offered a cautiously optimistic view.

Søren Skou said that “a higher oil price, all things being equal, will help the green transition because it will reduce the cost premiums, if you like, for greener fuels.”

“So we see it more as a way to accelerate the green transition than to reject it.”

– Silvia Amaro of CNBC contributed to this report