Volkswagen to prolong coal-fired power as Russia concerns continue

Covering an space of 6.5 million square meters, VW’s massive production facility in Wolfsburg takes advantage of two cogeneration vegetation that present it with heat and power.

Krisztian Bocsi | Bloomberg | Getty Pictures

The CEO of Volkswagen informed CNBC Wednesday that the German automotive large was preserving its choices open up in terms of how it powers its huge producing plant in Wolfsburg, admitting coal would still be necessary because of to ongoing tensions among Russia and Europe.

Talking to CNBC’s Annette Weisbach, VW chief Herbert Diess was requested how worried he was about fuel materials from Russia stopping and what that would suggest for his firm’s operations.

“That’s really genuinely a menace … mainly because it is really incredibly hard to forecast what is likely to come about,” Diess stated. “Right here in Wolfsburg we even now have coal-fired electricity plants which we preferred to — and we are — converting into fuel.”

Covering an space of 6.5 million square meters, VW’s production facility in the city of Wolfsburg works by using two cogeneration plants that supply it with heat and electrical power.

The business had been setting up to swap its coal-fired boilers with fuel and steam turbine units in a bid to lessen carbon dioxide emissions, but world wide gatherings would seem to have prompted a rethink for the time becoming.

“It really is all organized but now we are a minimal bit hesitating, and we will look and see how the situation is going to acquire,” Diess claimed. “We can [adapt] … to the condition. We can, [for] a minimal little bit, extend our coal-fired vegetation — ideally it is not for as well prolonged. Then we would like to modify to gasoline the moment the source is secured.”

On Wednesday, Reuters also quoted Diess as telling reporters that VW experienced “just decided to update our coal-fired energy plants to nonetheless be equipped to use coal or gas,” incorporating that this similar to the company’s key operations in Wolfsburg.

VW documented results for the 1st quarter of 2022 on Wednesday. Functioning profit in advance of specific goods strike 513 million euros (around $541 million), up from 490 million euros in the to start with quarter of 2021. The organization noted sales income of just beneath 15 billion euros when compared to 17.6 billion euros in the initially quarter of 2021.

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Diess’ remarks came on the exact day the European Fee, the EU’s government branch, put ahead new sanctions versus the Kremlin that will contain a six-thirty day period phase out of Russian crude imports.

“We will period out Russian offer of crude oil inside of 6 months and refined merchandise by the end of the 12 months,” Ursula von der Leyen, the European Commission’s president, said in a speech outlining the strategies.

“Hence, we maximize the strain on Russia, though at the identical time – and this is essential – we lower the collateral problems to us and our associates all-around the world,” she mentioned. “Mainly because to aid Ukraine, we have to make guaranteed that our overall economy continues to be powerful.”

Russia was the biggest supplier of both equally petroleum oils and normal fuel to the EU last calendar year, according to Eurostat. Towards the close of April, Russia’s point out-owned strength firm Gazprom stopped provides to two EU nations, Poland and Bulgaria, since they experienced refused to pay back for fuel in rubles. The go led numerous to concern that other international locations in the EU could see their materials halted too.

Geopolitical instability, the volatility of strength marketplaces and the Covid-19 pandemic have all sparked issues in some quarters that any changeover to a world financial system centered all around renewables could be delayed or prevented.

Throughout an job interview with “Squawk Box Europe” on Wednesday early morning, the CEO of shipping huge Maersk offered a cautiously optimistic outlook.

Søren Skou stated “a bigger oil rate, all issues equal, will support the environmentally friendly changeover because it will make the cost rates, if you will, for greener fuels smaller sized.”

“So we see that a lot more as a way of accelerating the green changeover than pushing it back again.”

— CNBC’s Silvia Amaro contributed to this report