Volkswagen to lengthen coal-fired energy as Russia issues proceed

The CEO of Volkswagen informed CNBC Wednesday that the German automotive large was retaining its choices open by way of the way it powers its enormous manufacturing plant in Wolfsburg, admitting coal would nonetheless be wanted as a result of ongoing tensions between Russia and Europe.

Talking to CNBC’s Annette Weisbach, VW chief Herbert Diess was requested how involved he was about gasoline provides from Russia stopping and what that may imply for his agency’s operations.

“That is really actually a menace … as a result of it’s extremely onerous to foretell what is going on to occur,” Diess stated. “Right here in Wolfsburg we nonetheless have coal-fired energy crops which we needed to — and we’re — changing into gasoline.”

Masking an space of 6.5 million sq. meters, VW’s manufacturing facility within the metropolis of Wolfsburg makes use of two cogeneration crops that present it with warmth and energy.

The agency had been planning to exchange its coal-fired boilers with gasoline and steam turbine items in a bid to decrease carbon dioxide emissions, however international occasions would seem to have prompted a rethink in the meanwhile.

“It is all ready however now we’re slightly bit hesitating, and we are going to look and see how the state of affairs goes to develop,” Diess stated. “We are able to [adapt] … to the state of affairs. We are able to, [for] slightly bit, lengthen our coal-fired crops — hopefully it is not for too lengthy. Then we want to change to gasoline as soon as the provision is secured.”

On Wednesday, Reuters also quoted Diess as telling reporters that VW had “simply determined to improve our coal-fired energy crops to nonetheless be capable to use coal or gasoline,” including that this associated to the corporate’s major operations in Wolfsburg.

VW reported outcomes for the primary quarter of 2022 on Wednesday. Working revenue earlier than particular objects hit 513 million euros (round $541 million), up from 490 million euros within the first quarter of 2021. The agency reported gross sales income of slightly below 15 billion euros in comparison with 17.6 billion euros within the first quarter of 2021.

Diess’ remarks got here on the identical day the European Fee, the EU’s government department, put ahead new sanctions in opposition to the Kremlin that will include a six-month phase out of Russian crude imports.

“We’ll section out Russian provide of crude oil inside six months and refined merchandise by the tip of the yr,” Ursula von der Leyen, the European Fee’s president, stated in a speech outlining the plans.

“Thus, we maximize the strain on Russia, whereas on the similar time – and that is vital – we reduce the collateral injury to us and our companions across the globe,” she stated. “As a result of to assist Ukraine, we’ve to guarantee that our economic system stays sturdy.”

Russia was the most important provider of each petroleum oils and pure gasoline to the EU final yr, according to Eurostat. Towards the tip of April, Russia’s state-owned power agency Gazprom stopped supplies to two EU nations, Poland and Bulgaria, because they had refused to pay for gas in rubles. The transfer led many to worry that different nations within the EU might see their provides halted too.

Geopolitical instability, the volatility of power markets and the Covid-19 pandemic have all sparked issues in some quarters that any transition to a world economic system centered round renewables might be delayed or prevented.

Throughout an interview with “Squawk Field Europe” on Wednesday morning, the CEO of delivery large Maersk provided a cautiously optimistic outlook.

Søren Skou stated “the next oil worth, all issues equal, will assist the inexperienced transition as a result of it is going to make the price premiums, if you’ll, for greener fuels smaller.”

“So we see that extra as a manner of accelerating the inexperienced transition than pushing it again.”

— CNBC’s Silvia Amaro contributed to this report