German utility RWE AG (RWE.XE) said late Tuesday Germany's nuclear exit will slow down its planned reduction of carbon dioxide emissions, implying it will have higher power generating costs than previously anticipated.
German utility RWE AG (RWE.XE) said late Tuesday Germany's nuclear exit will slow down its planned reduction of carbon dioxide emissions, implying it will have higher power generating costs than previously anticipated.

"We won't reach the figure of 450 grams of carbon dioxide per kilowatt hour," Matthias Hartung, who heads the RWE Technology subsidiary responsible for the construction of new plants, said late Tuesday in Essen.

The company had so far planned to reduce its emissions until 2020 to 450 grams per kilowatt-hour from 730 grams in 2010.

More emissions mean RWE will have to buy additional emission rights.

So far, the company gets more than two-thirds of the required emissions rights free. However, it faces additional expenses of EUR1.5 billion in 2013 when it will have to buy certificates for all its emissions, based on the current market price of around EUR15 a metric ton.

The German government has decided to take eight nuclear plants offline in the wake of Japan 's Fukushima nuclear crisis and to phase out the country's remaining nine plants gradually until 2022.

RWE reduced its emissions last year by almost 10%, partially by generating more power at its Biblis nuclear plant. However, the Biblis plant is now offline due to the government decision.

It is unclear how to fill the gap in zero-emission generation capacities left by the nuclear exit, said Hans Buenting, chief financial officer of RWE's renewable energies section.

The company is investing EUR1.3 billion a year in expanding its renewable energy capacity, which accounted for just below 6% of its overall capacity in 2010. It aims to raise this share to 30% by 2025, but this would not be sufficient to compensate for the missing nuclear energy.

RWE's board is due to announce the costs of the nuclear phase-out together with its half-year earnings figures and provide an updated earnings outlook for this year on August 11. It might also show ways of financing further growth and renewable plants despite high debt levels and diminishing earnings.

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