Brussels, 27/02/2014 (Agence Europe) - A new report by environmental NGO Greenpeace highlights the inability of large electricity companies to adapt to changing market conditions.
The biggest European electricity companies are in trouble because of their reluctance to question their outdated business models in the face of far-reaching structural changes to the European energy market, says Greenpeace in a report - Locked in the past: Why Europe's big energy companies fear change - published on 27 February. The report shows the extent to which these energy giants are weighed down by over-investment in gas and coal plants, and how they continue to neglect lucrative opportunities in an expanding renewable energy sector. Incapable of adapting to new market realities, these companies have lost nearly €0.5 trillion in five years, says Greenpeace. “Europe's energy companies are wounded animals with bleeding profits and a gloomy outlook. So far, their response has been to vent their rage at renewables and lobby aggressively against any policies that help secure an energy transformation. But failure to adapt will only make it harder to defend their alpha-male status in an increasingly challenging environment that could spell their downfall”, says Greenpeace EU energy and transport policy director, Franziska Achterberg.
Greenpeace notes that only 4% of the electricity produced by the ten biggest European energy companies - RWE, E.ON and EnBw from Germany, EdF and GdFSuez from France, Vattenfall from Sweden, ENEL from Italy, Iberdrola from Spain, CEZ from the Czech Republic, and PGE from Poland - comes from renewable sources (excluding hydro power). These ten companies produce 58% of all power in Europe, however. Greenpeace also notes that, despite the slowing demand, energy companies have added 85 gigawatts in fossil fuel power capacity over the last ten years - the equivalent of all of Germany's fossil fuel power plants. In order to maintain their already diminished 2012 profit levels, the companies will have to shut down about 50 gigawatts of fossil fuel capacity by 2017, Greenpeace warns.
“Having missed the train of the renewables revolution, energy companies are now trying to derail it by putting pressure on EU governments to turn back. In the crucial debate on EU climate and energy policy for 2030 taking place right now, power utilities oppose targets to increase the share of renewables and reduce energy consumption”, says Greenpeace, underlining that some of the companies - such as Iberdrola, E.ON and ENEL - have nevertheless made annual earnings of €4-5 billion from their renewables activity. “Large power companies have no alternative but to redesign their strategies. European governments - often themselves major shareholders of these companies - have the responsibility to shepherd them towards new economically and environmentally sustainable business models. They should agree three binding 2030 targets for the EU to increase the share of renewable to 45%, cut carbon emissions by at least 55%, and improve efficiency by 40%”, Greenpeace concludes. (EH)